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Posted by: Altura Benefits in Insurance
What’s the average cost of employee benefits? Which types of plans are offered? What is the average employer contribution? The 2021 Employer Health Benefits Survey from KKF offers a snapshot of the current employee health benefit costs and offerings. Here are some important takeaways from the KFF study to answer these questions and more.
In 2021, 59% of firms offered health coverage. Compared to small firms, large firms were much more likely to offer coverage. Among firms with three to nine workers, 49% offered health coverage, and among firms with 50 to 199 workers, 93% offered coverage. Among firms that offer coverage, nearly all (96%) offered both single and family coverage.
There were also some regional differences. In the Midwest, 59% of firms offered health benefits. However, 57% of firms in the Northeast, 54% of firms in the South and 67% of firms in the West offered health benefits.
However, only 81% of workers at firms that offered coverage were eligible to enroll, and only 77% of these eligible workers actually enrolled. As a result, only 62% of workers at firms that offered coverage were enrolled in a plan. Younger and lower-wage workers were less likely to accept coverage.
Unsurprisingly, part-time workers were less likely to be offered health benefits. Overall, 20% of firms offered health benefits to part-time workers in 2021, but there were significant differences depending on the size of the company. Among firms with 25 to 199 workers, 16% offered health benefits to part-time workers. Among firms with 5,000 or more workers, 58% offered health benefits to part-time workers.
The percentage of firms offering health benefits has increased slightly in recent years. In both 2020 and 2016, 56% of firms offered health coverage. However, when looking back farther, it’s clear that the number of firms offering health benefits has decreased. In 2001, 68% of firms offered health benefits. Among firms that do not offer coverage, cost is most frequently cited as the reason.
Three in four companies only offered one type of health plan, although larger companies were more likely to offer more than one plan type, with 59% of large firms and 23% of small firms offering two or more plan types.
PPOs were the most common plan type in 2021, representing 46% of all enrollments. High-deductible health plans with a savings option captured 28% of enrollments, while 16% of participants enrolled in HMOs, 9% enrolled in POS plans, and 1% enrolled in conventional or indemnity plans.
This breakdown has not changed much since 2016, when 48% of participants were in a PPO, 29% were in an HDHP, 15% were in an HMO and 9% were in a POS.
In the Midwest, high-deductible health plans with a savings option were especially popular, capturing 39% of enrollments. In this region, 44% of workers were enrolled in PPOs, 8% were enrolled in HMOs, 8% were enrolled in POS plans, and 1% were enrolled in conventional plans.
Self-funding was also a popular option. A total of 64% of covered workers were in self-funded plans. Self-funding was especially popular in large firms, where 82% of workers were enrolled in self-funded plans.
The KFF study shows that wellness programs were also popular. Among large firms, 83% offered a smoking cessation, weight management or behavioral/lifestyle coaching wellness program. At small firms, 58% offered at least one of these programs. During the pandemic, 16% of employers added employee assistance programs (EAPs) or other new resources.
Remote wellness options have become more important because of the pandemic, and KFF’s findings reflect this. In 2021, 95% of firms with 50 or more employees offered telemedicine benefits, up from 85% in 2020 and 67% in 2018.
During the pandemic, 15% of small firms and 21% of large firms added digital elements to their wellness programs, while 38% of small firms and 58% of large firms provided or expanded online counseling services.
Premiums have continued to go up. In 2021, the average annual premium cost for single coverage was $7,739. Family coverage cost an average of $22,221.
There were differences in costs based on plan type, region, industry, company size and other factors. For example, costs were relatively high in the Northeast, where the average annual premium for single coverage was $8,134 and the average annual premium for family coverage was $23,596. In the Midwest, the average premium for single coverage was $7,697, and the average premium for family coverage was $22,401.
Healthcare workers also had relatively high premiums. In this industry, the average annual premium for single coverage was $8,205 and the average annual premium for family coverage was $23,313. Workers in mining, agriculture and construction, on the other hand, had relatively low premiums, with annual premiums for single coverage costing $7,026 and annual premiums for family coverage costing $20,559.
The plan type had an impact on premium cost, with high-deductible health plans being less expensive and PPOs being more expensive. Workers in high-deductible high plans with a savings option paid an average annual premium of $7,016 for single coverage and $20,802 for family coverage. Meanwhile, workers in PPOs paid $8,092 for single coverage and $23,312 for family coverage.
It should also be pointed out that these figures are all averages, and many premiums were significantly higher or lower. In 2021, 26% of annual premiums for single coverage fell between $7,000 and $7,999, 15% cost $8,000 to $8,999, 12% cost $9,000 to $9,999, 4% cost $10,000 to $10,999 and 6% cost $11,000 or more. On the other end of the spectrum, 18% cost between $6,000 and $6,999, 13% cost between $5,000 and $5,999, 4% cost between $4,000 and $4,999 and 1% cost $3,999 or less.
Both the average annual premium for single coverage and family coverage increased by 4% from the previous year. During the same period, workers’ wages increased 5% and inflation increased 1.9%.
Over the last five years, the annual premium for family coverage has increased 22% and the premium for single coverage has increase 20%. Over the last 10 years, it has increased 47%. Inflation over the last 10 years has only increased 19%.
Responsibility for the total annual premium is typically split between the worker and the employer. In 2021, the average employer contribution for all plans was $6,440 for single coverage and $16,253 for family coverage. The average worker contribution for all plans was $1,299 for single coverage and $5,969 for family coverage.
Overall, employers contributed an average of 83% of the premium for single coverage and 72% of the premium for family coverage. There were some regional differences. In the Midwest, employers contributed 82% for single coverage and 75% for family coverage.
There were also some differences based on company size. Workers at small firms paid a larger portion of the premium for family coverage. In small companies, employers contributed 63% of the premium for family coverage, whereas large employers contributed 76%. However, workers at small firms were also more likely to contribute nothing for single coverage, with 29% of covered workers in small firms paying nothing and only 5% of workers in large firms paying nothing.
In addition to the premium, covered workers often have other out-of-pocket costs. Among all firms, 85% of covered workers also had an annual deductible. The average deductible for single coverage was $1,669 in 2021. This represents an increase of 68% over the last decade. Copayments and coinsurance requirements were also common. Among covered workers, 71% had a copayment for a primary care physician office visit and 20% had a coinsurance charge.
The KFF study shows what other employers are offering now in employee health benefits, but what about your own benefits package? If you need help putting together a competitive employee benefits package, we’re here to help. Contact us.
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