Employers consider health insurance an essential part of their compensation. However, the cost of these benefits is on the rise for over a decade. Increasing deductibles, prescription drug costs and health system pricing are among the reasons. These trends are driving premiums to rise and depressing wages. Many employers are unhappy with rising costs and increasing administrative burdens. Others are seeking non-wage options.
Employers are using more wearable devices for their wellness programs. One survey revealed that 55% of employers have access to data from employees' wearable devices. While price increases are still the primary driver of health insurance, more employers are exploring new payment options to keep employees healthy.
The Congressional Budget Office predicts that in the next ten-years, the number Americans who receive health coverage through employer-sponsored programs will remain at the current 159 million. This means that health insurance will remain a tax-favored option. However, the cost of single coverage in 2019 will be higher than 9.86% of household's income.
Premiums are not just the cost of the health insurance, but also the cost of deductibles. The deductible for workers in the United States is at least $2,000. A quarter of American workers have a deductible of at least $2,000. This is why many companies choose to self-insure their employees. When claims are low, the self-insured plan saves money. However, if the claim exceeds expectations, the employer may have to pay more.
The employees' age mix determines small group rates. Massachusetts has a median annual income of $1186 for workers younger than 25 and an average annual income of $6,896 for those older.
Larger employers are able to control the plan coverage. Most large employers offer a biometric screening to their employees. Employers also have the option of a wellness program that encourages employees to seek out lower-cost providers. The public sector also has the ability to tailor health care plans for employees.
The Affordable Care Law will make it possible for employers with 51 to 100 workers to be part of a merged healthcare insurance market. This is expected to happen in 2016. Premiums will increase for these employers by up to 9 percent. States are required to establish a rate each year. For those who fail to offer affordable plans, a $3480 annual penalty will be imposed.
Some small employers may need to make additional contributions in order to subsidize their employees' health insurance. Massachusetts is an example of a state where employers are required to contribute $50 per employee annually.
Despite these requirements however, there is still a decrease in the number of employers that offer health insurance. Many small employers are dissatisfied with the uncontrollable costs of benefits, after a decade filled with rapid increases. Although these health insurance rates are not increasing for most employers, some are still finding it difficult to retain employees.
As unemployment remains low, so is the difficulty in keeping employees. Employers face this issue. Employers who don't provide health insurance for their employees will be subject to a $2,320 penalty per employee. Failure to comply with COBRA (a law that requires employers provide ongoing health care for their employees) can result in thousands of dollars in penalties.