Increased costs of health insurance eating into raises

screenshot_488SUMMARY: In 2016, the average annual premiums for employer-sponsored health insurance are $6,435 for single coverage and $18,142 for family coverage. The average family premium rose 3% over the 2015 average premium.The average premium for family coverage is lower for covered workers in small firms (3-199 workers) than for workers in large firms (200 or more workers) ($17,546 vs. $18,395). Workers’ wages increased 2.5% and inflation increased 1.1% over the period.

Premiums for family coverage have increased 20% since 2011 and 58% since 2006. Average premiums for high-deductible health plans with a savings option (HDHP/SOs) are considerably lower than the overall average for all plan types for both single and family coverage, at $5,762 and $16,737 respectively.

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These premiums do not include any employer contributions to workers’ health savings accounts or health reimbursement arrangements. As discussed below, the share of covered workers with HDHP/SOs has grown eight percentage points over the last two years; this change in enrollment has reduced the growth in single and family premiums by roughly a half percentage point each of the last two years.

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Most covered workers make a contribution towards the cost of the premium for their coverage. On average, covered workers contribute 18% of the premium for single coverage and 30% of the premium for family coverage, similar percentages to the recent past. Workers in small firms contribute a higher average percentage of the premium for family coverage (39% vs. 26%) than workers in large firms. Covered workers in firms with a relatively high percentage of lower-wage workers (at least 35% of workers earn $23,000 a year or less) contribute higher percentages of the premium for single (23% vs. 18%) and family (35% vs. 30%) coverage than workers in firms with a smaller share of lower-wage workers.

As with total premiums, the share of the premium contributed by workers varies considerably. For single coverage, 12% of covered workers are in plans that do not require them to make a contribution, 62% are in plans which require a contribution of 25% or less of the total premium, and 2% are in plans that require a contribution of more than half of the premium. For family coverage, 3% of covered workers are in plans that do not require them to make a contribution, 45% are in a plan that requires a contribution of 25% or less of the total premium, and 15% are in plans that require more than half of the premium (Exhibit C). Covered workers in small firms are much more likely to be in a plan that requires the worker to contribute more than 50% of the total family premium than covered workers in larger firms (34% vs. 7%).

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Among covered workers with a general annual deductible, the average deductible amount for single coverage is $1,478, higher than the average deductible last year ($1,318). Among all covered workers, those enrolled at firms with a deductible and those without, the average deductible is $1,221, significantly more than $1,077 in 2015. The average deductible for covered workers is higher in small firms than in large firms ($2,069 vs. $1,238). Sixty-five percent of covered workers in small firms and 45% of covered workers in large firms are in a plan with a deductible of at least $1,000 for single coverage, similar to the percentages last year; a similar pattern exists for those in plans with a deductible of at least $2,000 (41% for small firms vs. 16% for large firms).

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