Employers passing rising healthcare costs onto employees
Healthcare costs are rising. And as employers face higher price tags, many are pushing costs onto workers to help maintain budgets.
The average cost per covered employee has increased by nearly $500 in the span of one year, according to the Society for Human Resource Management’s new Health Care Benchmarking Report, released Tuesday. Employers spent an average of $8,669 per covered employee in 2015, compared to $8,171 per employee in the previous fiscal year.
“More and more employers are having to push the increasing cost of healthcare onto employees,” says Evren Esen, director of workforce analytics at SHRM.
The average cost of providing healthcare makes up 7.6% of a company’s annual operating budget. As employers look ahead and evaluate ways to help alleviate costs, high-deductible health plans are emerging as the major choice.
“HDHPs such as health savings accounts (HSAs) and health reimbursement arrangements (HRAs) are one way that employers are attempting to counter the high costs,” Esen says.
According to the survey, almost all employers (98%) now offer healthcare coverage for full-time employees. Twenty-three percent offer coverage for part-time employees, down from 27% in 2014. In addition, 92% of employers offer coverage for the spouses of employees, down from 96% in 2011.
Andrew Mariotti, SHRM’s research lead on the report, says fewer organizations offer spousal coverage and more organizations have a spousal surcharge than in previous years, to help curb costs.
Currently, 52% of employers offer HSAs and 77% offer HRAs. In the previous fiscal year, 49% reported offering an HSA and 23% offered an HRA.
According to SHRM’s research, 92% of companies offer generic prescriptions, with 95% of organizations offering a 90-day mail-order prescription service.
Recent data from the National Business Group on Health points to a rise in specialty pharma costs hitting employers hard, which dovetails with SHRM’s recent figures.
The average employee co-pay is $11 for generic medication, $33 for formulary brand medication (insurance carriers’ preferred drugs) and $58 for non-formulary brand medication, SHRM’s study notes.
Among other findings in the report:
- High-deductible plans: On average, employers contribute $576 to their employees’ HSA accounts and $1,885 to employee HRAs. In 2014, employers contributed an average of $632 to HSAs and $2,829 to HRAs.
- Deductibles and premiums: Across all plans, the average annual in-network deductible for employee-only coverage is $1,554; the total monthly premium for employee-only coverage is $461; and the total monthly premium for family coverage is $1,292.
- Co-pays: The average co-pay for in-network primary care office visits for employee-only coverage across all plans is $22.