Employers expect healthcare costs to jump 5% in 2021 amid coronavirus pandemic

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Large employers expect their healthcare benefit costs will surpass $15,000 per employee in 2021, although the coronavirus pandemic has many organizations questioning what the total impact will be on their overall costs, according to new data from the Business Group on Health’s annual survey.

The rising costs come as employers commit to expanded virtual care options offered to employees next year, with other plans for improved mental health and emotional well-being benefits.

According to the survey, the total cost of health benefits is expected to rise 5.3% in 2021, taking cost management initiatives into account. The increase is slightly higher than the 5% increases employers projected in each of the last five years.

Including premiums and out-of-pocket costs for employees and dependents, the total cost of healthcare is estimated to be $14,769 per employee this year, an increase of $197 from last year. The total cost is projected to rise to an average of over $15,500 in 2021. In line with recent years, employers will cover nearly 70% of costs while employees will bear about 30%, or nearly $4,500.

“Healthcare costs are a moving target and one that employers continue to keep a close eye on,” Ellen Kelsay, CEO of Business Group on Health, said in a statement. “The pandemic has triggered delays in both preventive and elective care, which could mean the projected trend for this year may turn out to be too high. If care returns to normal levels in 2021, the projected trend for next year may prove to be too low. It’s difficult to know where cost increases will land.”

Nearly all employers will offer telehealth services for minor, acute services, according to the survey, while 91% of employers will offer telemental health. That figure could grow to 96% by 2023.

“The growth in virtual care described in the survey aligns with what we’ve seen from our clients during the pandemic. In March, the first month of widespread shelter-in-place orders, we saw telemedicine requests shoot up 41% from February,” says Justin Holland, CEO of HealthJoy, a healthcare benefits platform. “This year made it obvious that telemedicine is here to stay.”

In addition to telehealth services, employers will be focusing more on the expansion of access to virtual mental health and well-being services in 2021. This trend is meant to address provider shortages, minimize wait times and reduce the stigma associated with seeking care.

Over two-thirds (69%) of the employers surveyed by the Business Group on Health say they provide access to online mental health support resources, including apps, videos and articles. That figure is expected to jump to 88% in 2021.

Roughly half (47%) of those surveyed say they provide manager training to help recognize mental and behavioral health issues and direct employees to services. Another 18% are planning to add this benefit next year. Additionally, 50% of those employers say they plan to conduct anti-stigma campaigns in 2021 in an effort to encourage those employees who need help to seek it.

“Focusing on mental health as an employer is more important than ever. Since last September, we’ve been having conversations with our employees to better understand the challenges they’re facing with mental health and how we can support them,” says Ron Crawford, vice president of global benefits at Starbucks.

See Also: Starbucks offers all employees access to free therapy

Over the past year, Starbucks introduced mental health benefits as part of a commitment to its employees to provide the care they need. The benefits include Headspace app subscriptions, mental healthcare through Lyra Health and a mental health fundamentals training program that was created in partnership with the National Council For Behavioral Health.

See Also: Starbucks expands mental health benefits with first aid program

“Mental health is an ongoing effort and priority for us, and there is more work to do to break the stigma so that more people can get the help they need,” Crawford says.

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Healthcare plans Voluntary benefits Healthcare costs Mental health benefits