Many employers view health insurance as a critical component of their compensation. For the past 10 years, however, these benefits have been increasing in price. 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. Employers are becoming frustrated with the rising costs and administrative burdens. Some are looking for non-wage alternatives.
Employers are using more wearable devices for their wellness programs. One survey found that one in five employers collect data on employees' wearable devices. While the health insurance market is still largely driven by price increases, more employers are also looking at new payment methods to help keep their employees healthy.
The Congressional Budget Office predicts that the number of Americans receiving health coverage through employer-sponsored systems will remain at the same 159 million in 10 years. Health insurance will still be tax-favored. However, single coverage will cost more than 9.86% of household income in 2019.
Premiums do not include the cost associated with health insurance. They also include the cost of deductibles. A quarter of American workers have a minimum $2000 deductible. This is the reason why many companies are opting for a self-insured plan, which is a way to reduce the overall cost of the benefits. Self-insured plans save money when claims are low. The employer must pay more if the claim is greater than expected.
The age mix of employees determines the rates for small groups. Massachusetts is an example of this. Workers under 25 are paid $1186 per year and those over 25 get $6,896.
Larger employers have greater control of plan coverage. Many large employers offer biometric screenings for their employees. They also provide a wellness program for employees and encourage them to go to lower-cost providers. The public sector also has the ability to tailor health care plans for employees.
The Affordable Care Act will shift employers with 51 to 100 employees into a merged health insurance market in 2016. These employers will see a rise in premiums of up to 9 percent. The law also requires that each state sets a rate every year. Those who don't offer affordable plans are subject to a $3,480 annual penalty.
Small employers are required to contribute additional funds to subsidize workers' health insurance in order to comply the ACA. Massachusetts employers are required by law to contribute $50 annually per employee.
Despite these requirements the number of companies offering health insurance is continuing to decline. Many small employers are unhappy with the high cost of benefits after a decade of rapid growth. While most employers do not see an increase in their health insurance rates, some find it difficult to retain staff.
As unemployment remains low, so is the difficulty in keeping employees. Employers are facing a serious problem. Employers who don't provide health insurance for their employees will be subject to a $2,320 penalty per employee. In addition to the fines, COBRA is a law that requires employers and employees to provide continuous health care.