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Here’s Why Employees Should Pay More Attention to Their Health Insurance Costs

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For a big swath of insurance-beleaguered Americans, not to mention their sandbagged employers, the price of health coverage just keeps going up.

The annual family premium for employer-sponsored health insurance rose 5% over the past year to an average of $19,616 for 2018, according to a survey by the Kaiser Family Foundation.

That may not seem like too much of a jump. But the increase is double the inflation rate, which was just 2.5% over the past year, Kaiser points out, and it’s nearly double the rise in workers’ wages, which gained 2.6% on average over the past year.

In most workplaces, the employer and employees share the cost of health insurance premiums in some way…and then, of course, the employees pay any deductibles and copays for services used. That makes it all the more important for people covered by employer-based health insurance to study the available options during the open-enrollment period. For instance, if you and your spouse both have employers that offer health insurance, compare the cost of obtaining coverage separately versus covering both of you at one employer. Also compare the costs of coverage for dependent children if you have any.

The health-care insurance burden falling on employees is weighty. According to the Kaiser survey, workers’ contribution to the premiums alone is, on average, $5,547 for family coverage, with employers picking up the tab for the balance.

While that dollar figure is similar to last year’s, according to the foundation, the long-term numbers are more sobering. The average worker contribution for family coverage has increased 21% over the past five years and 65% over 10 years.

Another growing burden—deductibles. Over the past decade, deductibles have soared, rising 212%, according to the foundation. Inflation totaled just 17% over that span, and  workers’ earnings grew just 26%. In other words, health-care costs have been and still are an out-of-control skyrocket that is claiming a larger and larger portion of what people earn.

“Health costs don’t rise in a vacuum,” the Kaiser Family Foundation said. “As long as out-of-pocket costs for deductibles, drugs, surprise bills and more continue to outpace wage growth, people will be frustrated by their medical bills and see health costs as huge pocketbook and political issues.”

Employer-sponsored health insurance is in many ways the cornerstone of nationwide coverage. Such insurance covers more than half of the non-elderly population—about 152 million people.

There are some numbers in the Kaiser survey that may…just may…suggest the trend of digging into workers’ disposable income is slowing.

Premiums for family coverage increased 78% in the six years from 2000 to 2006…and then increased 37% in the six years between 2006 and 2012…and then increased 25% in the six years between 2012 and 2018.

However, bear in mind that all of those premium increases far outstripped gains in workers’ earnings, which rose just 20% between 2000 and 2006, 18% between 2006 and 2012, and an anemic 14% between 2012 and 2018, according to the Kaiser Family Foundation.

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Source: The Kaiser Family Foundation, a nonprofit organization based in San Francisco focused on health care issues and the US role in global health policy, has produced the survey since 1999. National Research LLC conducted telephone interviews for the survey with human resource and benefits managers at 2,160 firms between January and July 2018. Date: October 23, 2018 Publication: Bottom Line Personal
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