The Kaiser Family Foundation released its 2021 Employer Health Benefits Survey in November. This is a very robust survey and always chock full of helpful information on the state and trajectory of employer health plans in America. Our clients always want to know what other employers are doing when it comes to benefits in their efforts to stay on top of the market and competitive within their industry, so we thought it would be helpful to summarize some key findings and trends outlined in the survey.
Worker wages are barely keeping pace with premium increases and inflation
The average annual premium for employer-sponsored insurance in 2021 is $7,739 for single coverage and $22,221 for family coverage. The average premium increased 4 percent over the last year and inflation increased 1.9 percent. Meanwhile, workers’ wages increased 5 percent.
In 2021, the average premium is $7,739 for single coverage and $22,221 for a family
This trend points to something we’re repeating about health plans and employee benefits, that healthcare costs are on an unsustainable trajectory. Where is the breaking point? A family premium of $22,221 with plans with a $4,000 family deductible can’t keep getting more expensive. Companies and their consultants have to act now to take control of this situation.
Wide differences in employer contributions at small companies
There was a much wider difference among small firms in contributions towards coverage, with 29 percent of workers in a plan where the employer pays the entire premium, and 31 percent of workers in a plan where they must contribute more than half of the premium for family coverage. For workers at large firms, those rates were 5 percent and 5 percent, respectively.
29 percent of workers at small firms are in a plan where the employer pays the entire premium
Employer contributions vary widely because there is so much variation in the finances and cash flow of small businesses. When employers ask us about their contributions, a quality benchmark analysis and comparison set can shed light on how similar firms are contributing towards health coverage and other benefits.
Significant increases in employee contributions
For 2021, the average annual employee contributions are $1,299 for employee-only coverage and $5,969 for family coverage. These contributions have increased dramatically over the last decade, with the average contribution for family coverage increasing 13 percent since 2016 and 45 percent since 2011. And for 8 percent of workers, and 20 percent of workers in small firms, worker contributions for family coverage are $12,000 or more.
Contributions to family coverage have increased 45 percent since 2011
Rise in self-funding and level-funding among small firms
A whopping 42 percent of small firms reported they have a level-funded plan, a type of self-funded health plan. This is a large increase from prior years and may signal that firms are reaching a breaking point with persistent increases in premiums for the ACA small-group marketplace.
42 percent of small firms reported having a level-funded plan
We’ve discussed these alternative funding strategies before, with discussions on stop-loss insurance, medical stop-loss captives, and opportunities for self-funded health plans in today’s market. This isn’t because we are early to the party but because many small and mid-sized firms have responded to increasing prices
Employee cost-sharing is still on the rise
The average annual deductible has been on the rise for years, with a 13 percent increase over the last five years and a 68 percent increase over the last ten years. There is also a marked difference between workers in small and large firms, with average single deductibles of $2,379 and $1,397 respectively.
And over the last five years, the percentage of workers with a deductible of over $2,000 has increased from 23 percent to 29 percent.
Additions to non-insurance benefits
We’ve talked in this space about additional benefits outside of insurance, and it’s validating to see the study find these on the increase.
- 15 percent of small firms and 21 percent of larger firms brought in a new digital program or content to their program.
- 8 percent of small firms and 10 percent of large firms increased support for wearable devices
- 17 percent of small firms and 34 percent of large firms adjusted their programs to better address the needs of people working from home
- A whopping 38 percent of small firms and 58 percent of large firms expanded virtual counseling services for issues such as emotional or financial distress, relationship issues, or other issues involving stress.
Virtual health took off in 2021, with 95 percent of companies with more than 50 employees covering telemedicine. This was a large increase from prior years, with 85 percent in 2020 and 67 percent three years ago offering coverage.
Mental health access increased
We have written before about the mental health needs of employees during COVID, and even outside of the pandemic, as we have had poor support from our health system and society for those with mental health needs.
Employers responded, with 16 percent of employers providing new resources for mental and behavioral health, such as a new EAP. And beyond new resources, 31 percent of employers expanded ways to access mental or substance abuse services, including telemedicine – this was the most common change made to firm benefits.
Employers now know more than ever; how will they use it?
In summary – employers can not claim ignorance in 2022 for not having an appropriate and adequate benefits program. There is too much good research out there like this survey from KFF that illustrates what other, similar firms are doing with their benefits. But with so much information in front of them, firms need a partner to sift through the noise and find the signal. A quality benefits consultant can help narrow a company’s focus on what matters contextually for the firm given its size, demographics, industry, and market. Work with your consultant, the best ones can change the game for you and your team.