The Kaiser Family Foundation (KFF) recently published the results of their highly anticipated Employer Health Benefits Survey for 2020. This year’s survey includes data from 1,765 non-federal private and public companies in the United States.
KFF’s annual report provides an in-depth perspective on trends in employer-sponsored health coverage. Their results span everything from medical premiums and funding mechanisms to wellness and health plan design.
The following is a summary of some important trends for you to know, along with a link towards the end of our summary for you to download the full report.
Impact of the Coronavirus on Survey Results
The economic and social impact of the coronavirus pandemic has had far-reaching effects on employers, employees, and employee benefits. Because the survey was conducted between January and July 2020, the data doesn’t reflect the impact of the pandemic for the second half of 2020.
That said, since many of the metrics evaluated, including contributions, premiums, plan offerings, and cost sharing, are established before the plan year commences, it is probable that survey responses in these areas were largely unaffected by the pandemic.
Other metrics, such as incentives for health screenings or inclusion of coverage for telehealth visits, may have changed over the course of the pandemic, the impact of which is still unfolding today.
Download Kaiser's 2020 Annual Employer Health Benefits Survey & Report here.
Health Insurance Premiums
Average premium rose 4% in 2020 for both single and family coverage. The average premium for an individual was $7,470, and for a family it was $21,342.
For single coverage under a high deductible health plan (HDHP) with a savings option, average premium ($6,890) was slightly lower than the average single coverage premium last year, however family coverage average premium ($20,359) for HDHPs was largely the same.
For single coverage, the average worker contribution towards premium was 17%, and for family coverage the average premium contribution was 27%.
Organizations with a high percentage of lower-wage workers (defined as at least 35% making $25,000 or less annually) made above-average contributions towards family coverage: 35% vs. 24% for organizations with a smaller percentage of lower-wage workers.
Twenty seven percent of covered workers in small organizations are in a plan where the employer pays 100% of premium for single coverage, compared to large firms where only 4% of organizations pay the full premium.
Twenty eight percent of covered workers in small organizations are in a plan where they are required to contribute more than 50% of premium for family coverage, compared to 4% of workers in large firms.
The most common plan types in 2020 were the following:
- PPO - 47% of workers covered
- HDHP - 31% of workers covered
- HMO - 13% of workers covered
- POS plans - 8% of workers covered
HMO enrollment trends have risen and fallen over the last several years (enrollment was up to 19% in 2019), so it’s unclear how this will trend in the near future.
Employee Cost Sharing
The average deductible for all workers in 2020 was $1,644. The average annual deductible increased 80% in the last decade and 25% in the past five years. This increase in deductible amounts is largely due to the prevalence of HDHPs. In the past five years, the percentage of covered workers with a general deductible of $2,000 or more has increased 26%.
The vast majority of workers cover some part of the costs of their health care services. For example, 65% of covered workers have coinsurance, and 13% have a hospital admissions copay.
Nearly all workers are covered by a plan with an out-of-pocket maximum (OOPM), but the expense of this varies considerably. For covered workers with single coverage, 11% have an OOPM of less than $2,000, and 18% have an OOPM of $6,000 or more.
The average copayments are $26 for primary care and $42 for specialty care. The average coinsurance rates are 18% for primary care and 19% for specialty care. These amounts are similar to those in 2019.
Availability of Employer Sponsored Coverage
Approximately 157 million people are covered by employer-sponsored health insurance. Fifty-six percent of employers offer health benefits to at least some workers; this is a continuing trend from prior years. Only 48% of organizations with less than 10 employees offer coverage, while nearly every large employer (defined as 1,000 or more employees) offers coverage.
Even though the vast majority of workers are employed by organizations that offer health benefits, many workers are not covered due to ineligibility to enroll (waiting periods or part-time/temporary status), or the employee chose not to enroll (due to cost or they are covered elsewhere).
Eighty-two percent of workers are eligible for health benefits for organizations that offer coverage, and of these, 78% participate in employer-sponsored plans. This results in 64% of workers enrolling in coverage through their employer. This data is similar to 2019.
Health and Wellness Promotion Programs
Fifty-three percent of small employers and 81% of large employers offer at least one wellness program, primarily in weight management, smoking cessation, and lifestyle coaching. Forty-four percent of large employers offer incentives to participate, such as merchandise or gift cards.
Most large employers have programs to help workers identify health issues and manage chronic conditions, including health risk assessments, biometric screenings, and health promotion programs.
To keep pace with the increasing complexity of health screenings and wellness programs, incentives have become more sophisticated and may involve participating in or meeting goals in different programs. Twenty percent of large organizations have a maximum incentive of $150 or less, and 20% have a maximum incentive of more than $1,000.
Sites of Care
Telemedicine: Eighty-five percent of employers with 50 employees or more offer telemedicine services. Due to the coronavirus pandemic (from data collected through July 2020) telemedicine services have significantly increased, in particular among employers with between 50-199 workers.
Retail Health Clinics: Seventy-six percent of large employers’ cover health care services received in retail clinics, such as supermarkets, pharmacies, and retail stores.
Twenty-three percent of small company employees are enrolled in plans that are either entirely or partially self-funded. For large employers, it rises to 84%. Level-funded plans (plans that include a nominally self-funded option for small or mid-sized employers) have become more popular in the last few years.
The year 2020 is characterized by relatively low-cost growth for employer-sponsored coverage in a stable market. While premium growth continues to exceed inflation increases and earnings, the differences are relatively small.
While there are changes in terms of employer-sponsored health benefits, no trends have gained significant traction. It’s important to note, however, that it remains unclear how the coronavirus pandemic will affect employer health plans in 2021.
Due to the economic impact of the coronavirus, employers may need to shift more costs to employees than they have historically. It is possible employers may look to other funding models to provide competitive health benefits as a result.
The 2020 Presidential election and a Supreme Court case regarding the Affordable Care Act could both significantly impact employer health plans in ways that aren’t possible to foresee.
Looking ahead, employers should begin to identify resources and tools to offset higher premiums. As costs rise and political changes ensue, both employers and employees may see increased movement in the market.
For more information on benefits offerings or on what you can do to control your health care costs, contact JP Griffin Group today.