Premiums For Employer-Sponsored Family Health Coverage Rise Slowly For Sixth Straight Year

In 2017, some 151 million Americans rely on employer-sponsored coverage. According to the nineteenth annual Kaiser Family Foundation (KFF)/Health Research & Educational Trust (HRET) 2017 Employer Health Benefits Survey, annual family premiums for employer-sponsored health insurance rose an average of 3 percent to $18,764 this year, continuing a six-year run of relatively modest increases.

Health Affairs is releasing a Web First with selected findings from the report. The Web First is authored by Gary Claxton, a KFF vice president and director of the Health Care Marketplace Project; Matthew Rae, Michelle Long, and Anthony Damico of KFF; Heidi Whitmore of NORC at the University of Chicago; and Gregory Foster of HRET. It will also appear in the October issue of Health Affairs, to be released on October 2.

According to the authors, workers’ average contribution to family premiums in 2017 has increased more rapidly than the employer’s share since 2012 (32 percent versus 14 percent). Workers on average now contribute $5,714 annually toward their family premiums, and those at firms with fewer than 200 workers contribute more—$6,814 on average.

The survey highlights big differences in what covered workers at large and small firms pay for their health care. While there are far more small employers (3.1 million with 3–199 workers) than large ones (53,400 with at least 200 workers), more covered workers are at large firms (71 percent) than small ones (29 percent).

Those covered by small firms generally must pay more to cover their families:

• Workers covered by small firms on average contribute $1,550 more annually for family health coverage than those at large firms ($6,814 compared to $5,264).
• The gap occurs in part because small firms are three times as likely as large ones (45 percent versus 15 percent) to contribute the same dollar amount toward a worker’s health benefits whether or not the worker enrolls family members. More than a third (36 percent) of workers at small firms pay most of the total premiums for family coverage; far fewer (8 percent) do so at large
• Aggregate family deductibles are also higher at small firms than at large ones across all types of plans. For example, workers covered in PPOs (preferred provider organizations, the most common plan type) face an average aggregate family deductible of $3,660 at small firms, nearly twice the $1,899 average at large

The data are more mixed for workers enrolled in single coverage:

• Workers on average contribute $1,213 annually toward a single premium, though workers at small firms on average contribute less ($1,030) than those at large firms ($1,289).
• The average annual deductible for single coverage across all workers who face one is $1,505 in 2017, but it is 66 percent higher for workers at small firms ($2,120) than large firms ($1,276).

The survey finds just half (50 percent) of firms with fewer than fifty workers offer health benefits this year—down significantly from 2012, when 59 percent of firms this size offered benefits. Among small firms that do not offer health benefits, most say that the most important reason is either high costs (44 percent) or because they are too small (17 percent).

Of these small nonoffering firms, 16 percent say that they provide funds to their employees to purchase health insurance on their own in the individual market or through the Affordable Care Act (ACA) Marketplaces. However, very few (2 percent) say that the most important reason is that their employees can get a better deal in the Marketplaces.

“Small firms are much less likely to offer health benefits to their workers, and when they do, workers may find it quite costly to enroll their families,” the authors concluded.

Other survey findings include:

• Supplemental benefits. Most large firms that offer health benefits also offer dental (97 percent) and vision benefits (82 percent) separate from any coverage in the health plans they offer. Fewer offer long-term care insurance (25 percent). Small firms that offer health benefits are less likely than large ones to offer any of these other benefits.

• Financial incentives for wellness. Most large employers offer wellness programs, health screening programs, or both, such as health risk assessments, which are questionnaires about enrollees’ medical history, health status, and lifestyle, or biometric screenings, which are health examinations conducted by a medical professional. Close to half (45 percent) of large offering firms provide incentives for workers to participate in these programs. Among this group, 42 percent offer maximum financial incentives of at least $500.

• Penalties for tobacco use. Among firms offering health benefits, 16 percent of small firms and 14 percent of large firms require higher premium contributions or cost sharing from workers who use tobacco.

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