In Costly Health Insurance Market, Deductibles Rise

The median in-network deductible on employer-sponsored PPO health plans increased 50 percent from $1,000 to $1,500 in 2016, according to new research from United Benefit Advisors.

This comes as the average health plan costs for employers decreased by $9 in 2016 to $9,727, and the employees’ share increased as they accepted lower coverage levels.

Employees contributed an average of $3,378 of the $9,727 annual cost, and employers contributed on average $6,350. In 2015, employers paid $6,403 of the $9,736 average overall cost.

“Overall, employer costs remained consistent because they are passing more and more of their increases on to employees, a trend we expect to see more of in the future,” says UBA CEO Les McPhearson. “Employers simply cannot continue to absorb unsustainable increases in health care costs. Unfortunately, neither can employees.”

The deductible increases are the result of two primary factors.

“First, by raising the deductible $500, you avoid a premium increase of roughly 3 percent to 6 percent,” said Carol Taylor with D&S Agency. “As long as insurance carriers are required to meet the (Affordable Care Act) metal levels, we can expect to see plan changes in this same direction.”

And, according to Ed Oleksiak with the brokerage Holmes Murphy, the deductible is “the variable you can move.” The amount employees pay for health coverage through payroll is capped, as is out-of-pocket maximums.

Oleksiak says he shows his clients cost tradeoffs.

“They have a budget to make, so we go through what levers we have to pull,” including the deductible, he explains. “Eventually, a client runs out of levers, and a conversation starts with an adviser on looking at the health of a population and wellness programs that can have a measurable impact.”

Source: Employee Benefits Adviser