While the new year feels like a fresh start for most workers, it’s also expected to come with a spike in health insurance premiums. Premiums and deductibles have been steadily increasing for years. The Kaiser Family Foundation (KFF) found that premiums for a family rose 4% in 2021, according to a survey focused on employer-sponsored benefits.
The average family pays $22,221 in premiums, according to KFF. Workers contributed $5,969 toward their coverage, while employers paid the rest. In fact, since 2011 the average family premiums have increased 47%, which KFF found was more than wages (31%) and inflation (19%).
Not only is this a financial hardship for American families, but it’s also draining companies that are struggling to maintain employee coverage. To complicate the matter, several federal programs providing support for healthcare are due to expire in 2022.
What to Expect in Healthcare Coverage
Rising healthcare premiums are only part of the problem. Deductibles are also skyrocketing. This is the amount workers have to pay before insurance kicks in and could make a huge financial difference for families dealing with a serious health issue.
The average single deductible has doubled in the last decade to $1,669. For the more affordable healthcare plans, deductibles can be as high as $8,000. Overall, 85% of the 155 Americans with employer-sponsored coverage have a deductible.
Another survey conducted by the Business Group on Health anticipates healthcare costs increasing by as much as 6% in 2022. Analysts pointed out that 2021 rates actually flattened out slightly because many Americans avoided treatments during the pandemic. That’s expected to end in 2022, which will drive up prices. Of all employers surveyed by BGOH, 94% expected higher medical costs because of delays in treatment.
Expiring Federal Support Programs
Federal legislation is also expiring in January 2022. The Coronavirus Aid, Relief, and Economic Security (CARES) Act was one of the first bills signed in 2020 to help workers. It gave money to businesses, enhanced unemployment programs, and funded hospitals.
One provision known as “safe harbor” allowed high-deductible health plans to cover telehealth and remote care services at little to no cost. The CARES act expired on December 31 and will now impact who is eligible for telehealth services.
Another rule under the American Rescue Plan Act (ARPA) in 2021 allowed for mid-year election changes for Dependent Care Reimbursement Accounts (DCRA). This allowed workers to elect higher limits to help pay for childcare pre-tax. The ARPA also expires on December 31. If the new higher exclusion limit is not extended into 2022, families will have to contend with the previous $5,000 limit.
Around 30 million Americans get their health coverage from the Marketplace, which was established by the Affordable Care Act. With more enrollees and more available plans in 2022, experts anticipate a change in premium subsidies that could increase the total price people have to pay.
Navigating the Future
Regardless of what employers decide to do, HR departments need to be proactive in guiding employees through the process. Healthcare decisions are complex and no company wants disgruntled workers as a result of cutting or switching plans without notice. Clear communication and assistance are necessary to ensure a smooth transition that is beneficial for everyone.
Companies and HR departments should also keep in mind that the benefits they ultimately choose will define future recruiting. Healthcare benefits are a top decision-making factor for most prospects.
By Mckenzie Cassidy
Originally posted on HR Exchange Network
Choosing the right benefits during open-enrollment season is so important and can help save money. It can also give individuals and families broader support with their health. Benefits like medical coverage are particularly important with high inflation having such a big impact on people’s budgets.
For most employers, employee benefits represent a significant portion of their overall budget and a critical part of their employee recruitment and retention strategy. Benefits vary from employer to employer but can range from medical or dental insurance to flexible spending accounts, life and disability insurance, and more. The annual process of renewing those benefits involves a great deal of work, most of which is unseen by employees.
