Survey: Employer Health Insurance Costs Up 5.1% from 2012 to 2013

Towers Watson report: Employee contribution continues to rise.
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Employers expect average total costs for active employees to reach $12,136 in 2013, up 5.1 percent from 2012 – the lowest cost increase in 15 years, according to the annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Healthcare.

Employees contribute 42 percent more for health care than they did five years ago, despite relatively moderate cost increases in the past few years, according to the report. Employers increased their contribution by 32 percent.

The total employee cost share, including premiums and out-of-pocket costs, has climbed from 34 percent in 2011 to 37 percent in 2013.

In the coming years, more than 80 percent of respondents plan to continue to raise the share of premiums paid by employees, including rethinking their subsidy strategy for dependents.

Employers are also looking at new options such as exchanges for active employee and retiree populations. Nearly 30 percent of employers are already facilitating access to an exchange-based solution for retirees in 2013, with another 36 percent planning to do so over the next three years. The outlook for active employees is a bit different. Eighty-two percent said it is not at all likely that their organization will direct active employees to an exchange without a subsidy in the next five years, and 60 percent said the same, even with a subsidy.

Here are some more numbers from the survey:

  • Nearly two-thirds of respondents offer financial rewards to encourage participation in health programs. Today, 16 percent of companies align their rewards/penalties to specific biometric targets (other than tobacco use), and another 31 percent are considering this strategy for 2014.
  • The best performers had an average health care cost increase of 1.7 percent in 2012, less than half the median increase and roughly in line with the general inflation trend.

Read more on the survey from Towers Watson.

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