Employers always want to know what other companies are doing with their benefits. They want to ensure they offer competitive benefits so they can recruit and retain their workforce, especially in today’s tight labor market. And knowing what peer organizations are offering and doing with their benefits is key.
One great resource is the Kaiser Family Foundation’s 2021 Employer Health Benefits Survey (no relation to Kaiser Permanente). It is a broad survey of small and large employers regarding their health benefits for employees, such as types of plans, contributions, cost-sharing, and more.
Average family premiums increased 22 percent over consecutive 5 year periods
From 2011 to 2016 and 2016 to 2021, the average family premium increased 20 and 22 percent, respectively. While total family premiums in 2011 were $15,073, they had increased to $22,221 in 2021. On average, workers contributed 17 and 28 percent of the premium for single and family coverage.
For employers in the small to mid-sized market, understand that your competitors may be paying around 80 percent of the premium for single and family coverage. This resonates with employees, who will leave a company with poor family coverage and stay at ones with good family coverage.
Nearly half of workers at small firms have a deductible of $2,000 or more
Every health plan has some form of cost-sharing – this is the share of health care costs, above premiums, which employees must pay for health care services. Overall, 85 percent of covered workers have a general annual deductible and 15 percent of plans have no deductible.
The average deductible is $1,669 but there is a significant difference in deductibles for workers at small and large firms ($2,379 vs. $1,397). Hence, a small employer may look to differentiate its health plan by featuring deductibles lower than competitors.
Other forms of cost-sharing include co-pays (averaged $25 for primary care and $42 for specialty care) and coinsurance (20 percent).
Telemedicine services expanded
Telemedicine utilization exploded due to COVID in 2020 and has stayed relatively high since then. We believe it is here to stay as the first point of contact for many employees to engage with the healthcare system.
19 percent and 35 percent of small and large firms, respectively, expanded the number of services covered through telemedicine. This includes not just urgent care but primary care, chronic disease management, and mental and behavioral health.
And 15 percent and 27 percent of small and large firms reduced or eliminated cost-sharing for telehealth visits. There are good reasons for this, as telehealth visits are lower cost, more convenient for employees, and reduce claims and claims costs on the health plan.
Regarding mental and behavioral health benefits, 16 percent of employers developed new resources such as an EAP. And 31 percent of employers expanded access for employees to receive mental health or substance abuse services.
The bottom line here is if you, as an employer, have not communicated your current telehealth resources and/or expanded them, then know that your competitors most likely have done so themselves.
More firms than ever before are self-funding their health plan
Most large firms, and increasingly more small firms, self fund their health plan, rather than purchasing health insurance. Overall, 64 percent of workers are enrolled in a self-funded plan. There is a stark difference, however, depending on the size of the firm. 21 percent of employees at small firms are enrolled in a self-funded plan, while 82 percent at large firms are in a self-funded plan (nearly a perfect example of the Pareto Principle).
In these plan types, employers self-fund ie pay for claims up to a certain dollar amount, at which point stop-loss insurance kicks in and the risk is transferred to insurers. We’ve seen a net increase in self-funding over the last few years and this survey found that 42 percent of small firms reported a level-funded plan (one type of self-funding), a substantially greater share than in years past.
While the ACA removed health-status rating for small group insurance, a small group with a self-funded health plan does pay claims based on its own members, so this dynamic is one to watch. As we have discussed in this space before, we think many small and mid-sized firms can benefit from considering a self-funded plan, particularly when they incorporate a risk-sharing pool like captive insurance to finance their health plan.
Not only do companies recognize potential cost savings over time with a self-funded plan, but they also get more control over plan features and benefits, such as offering more competitive deductibles and plan design as discussed above.
As you consider your health plans at your next renewal, ask yourself how your plans compare to your market and similar companies. If you are solely focused on managing costs, know that your employee churn will be high. If you are looking to retain your employees and reduce turnover, consider how a stronger benefits plan can not just help in this goal, but actually reduce your overall costs as well.