Shifting the burden of medical coverage
September 30, 2009 by Christian SchappelPosted in: Health care, In this week's e-newsletter - benefits, Latest News & Views, Pay and benefits
In tight times like these, both employers and employees are picking up the increasing price of health coverage.
But employees are picking up a bigger part of the burden. See how your numbers stack up against the recent findings of a study from benefits consulting firm Milliman.
Highest jump since 2006
Employers’ contribution to monthly health premiums jumped 5.4% in 2008, according to the study.
Employees’ hike: 14.7%
Total health coverage cost of a family of four on an employer’s plan: $16,771, up $1,162 from last year.
That’s the biggest total-dollar hike since 2006, says Milliman.
The average employer pays 59% of its employees’ healthcare premiums, according to the study.
Last year, companies paid an average premium of $9,947 per worker. Employees paid $4,004.
Tags: health coverage, health premiums, Milliman
October 8th, 2009 at 2:30 pm
It is a distortion to say that employees share of “premiums” went up more than employers share. You can’t look at the out of pocket increase to employees as if the value of the health plan did not go up even more at the same time.
Employers have been paying more and more of the total cost of healthcare every year since I got into the benefits business 30 years ago. This is because the annual increase in the value of coverage has always exceeded any increase in out of pocket costs to participants.
If the average claim goes from $10,000 to $13,000 in a year, that is a $3,000 increase (30%) in total costs. If the employees average out of pocket ( including employee premiums ) goes up from $1,000 to $1,300, that is a 30% increase.
However the employer plan that was paying $9,000 ($10,000 – $1,000) of the average claim is now paying $11,700. The employers increase is $2,700 while the employees portion is only $300.
For an extra $300 in out of pocket exposure, the employee recieved a $2,700 increase in the value of their coverage. That is a net increase in the value of the health plan provided by the employer of $2,700-$300 = $2,400.
The value of any insurance must take into consideration how much protection it buys. When the average health care claim goes up by more than the increase in out of pocket cost to participants, the value of the plan has gone up, not down.
October 14th, 2009 at 2:52 pm
Our company is seriously considering changing to an HRA in 2010. In the 26 years I’ve been working in a benefits office I have had no experience with an HRA. Can anyone comment on their experience?
Thanks!