Health insurance premiums among private-employer based plans are on the rise, requiring employees to pay a greater share of premiums in each paycheck. A recent study confirms the effects are being felt in all 50 states, as these costs are growing faster than household incomes.
The Commonwealth Fund analyzed federal and state-level data and reported total premiums for family coverage increased 50% across all states from 2003 to 2010. Employee annual share of premiums also surged 63% over the same period. Per person deductibles doubled.
“In 2010, 74% of workers using private-employer based health plans faced a deductible,” says Sara Collins, vice president of Affordable Health Insurance for The Commonwealth Fund. “In 2003, none of them faced a deductible. And, as people see more of their wages go to premiums, they’re seeing less coverage with high deductibles.”
In 2010, the average total premium paid by families in every state a year was $13,871. If this trend continues at the rate prior to the enactment of the Affordable Care Act, families will pay 72% more for premiums by 2020 – nearly $24,000. Health reform aims to slow premium growth by 1% per year, saving families and employers $2,161 annually by 2020.
“There are three areas of health care reform that have the potential for slowing premium growth,” says Dr. Kenneth Thorpe, chair of the Department of Health Policy & Management at the Rollins School of Public Health of Emory University. “Enhanced workplace wellness programs that are well designed and save money will take the pressure off premiums for small and mid-size employers. The exchanges that are to be established in 2014 can help contain costs. And better prevention systems and care coordination programs will help fight preventable diseases such as diabetes and obesity.”
Until health-care reform is fully implemented throughout the country, there are some things that families can do right now to help manage costs.
Dr. Katy Votava, president of Goodcare.com, stresses patients need to shop around.
“You should also always ask your doctor or pharmacist if there are generic, less expensive versions of the prescription drugs you’re currently taking,” Votava says. “And take advantage of preventative health care options that are included in every health plan available now.” Preventative options include vaccines, annual wellness check-ups, and preventative screenings.
Health Savings Accounts, or HSAs, are also a good option and accompany high deductible health plans. A portion of pre-tax dollars from every paycheck is deposited in an HSA and can be used for approved costs. The maximum contribution in 2012 is $6,250 for families and $3,100 for individuals. The money is saved tax-free, and can be withdrawn tax-free, and an account balance can be rolled over from the previous year.
“Also ask your human resources department if there are any wellness points programs,” says Dr. Katy. “Some employers with high deductible health plans will have employees fill out a survey, and if an employee is exercising, eating well, and is a non-smoker, they can earn points that translates into free money. That’s as much as $500, just for completing a survey or tracking your wellness behavior.”
Flexible Spending Accounts, or FSAs, are similar to HSAs. Qualified expenses can be paid for with an FSA, and the pre-tax money is also distributed tax free. Unlike an HSA, the money doesn’t roll over from year to year.
Votava recommends HealthCare.gov for insurance shoppers. “Keep track of where you’re spending the majority of your health dollars,” she says. “Whether you’re spending the most money on prescription drugs, co-payments, or medical equipment, there’s likely a plan out there that suits your specific needs.”