Many employers consider health insurance a crucial part of their compensation package. These benefits have been steadily rising in cost for the past ten years. There are many reasons for this, including rising deductibles, higher prescription drug costs, and increased health system pricing. These trends are driving both the rise in premiums as well as depressing wages. Many employers are frustrated at the increasing costs and administrative burdens. Some are looking for non-wage alternatives.
Employers are increasingly using wearable devices for wellness programs. A survey showed that nearly half of all employers store data about 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, single coverage will cost more than 9.86% of household income in 2019.
Premiums include not only the cost for health insurance but also the cost of deductibles. An estimated 25% of workers in the United States have a minimum $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. Self-insured plans can be a cost-saving option if there are few claims. However, if the claim is higher than expected, the employer has to pay extra.
The employee's age group determines the rate for small groups. Massachusetts workers below 25 years old are paid an average $1186 annually, while those above 25 receive $6,896.
Larger employers have greater control of plan coverage. Most large employers offer a biometric screen to their employees. Employers also have the option of a wellness program that encourages employees to seek out lower-cost providers. The public sector can also tailor their health care plans to fit employees' needs.
The Affordable Care Act will shift employers with 51 to 100 employees into a merged health insurance market in 2016. Premiums will increase for these employers by up to 9 percent. State governments are also required to set a rate annually. 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. For example, in Massachusetts, employers are expected to contribute $50 per employee per year.
Despite these requirements being met, the number employers offering health insurance continues its decline. After a decade-long period of rapid increases in benefits costs, many small businesses are becoming frustrated at the uncontrollable high cost. Despite the fact that health insurance rates have not increased for most employers, some employers are still struggling to retain their employees.
As unemployment remains low, so is the difficulty in keeping employees. This is a major problem for employers. If they don't offer health insurance to their employees, they will face a penalty of $2,320 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.