The 2022 Kaiser Family Foundation (KFF) Employer Health Benefits Survey yielded some interesting data points that may help with future employee benefits strategy and design.
The survey polled thousands of private and public employers with as few as three employees. It showed that in 2022, health insurance premiums largely stayed the same as they were in 2021. But KFF cautions that could be because premium rates were finalized in the fall of 2021 — before the effects of inflation became particularly clear. With rising costs continuing, KFF says higher premiums could be on the horizon.
Research from the HR consultancy Mercer supports this. Its 2023 outlook indicates that the per-employee health benefit cost will rise more than 5% this year.
Solid communication is key to getting employee buy-in
Make benefit communications a top priority to combat higher premiums, says the nonprofit employer association MRA. This starts by delivering the message that you’re in this together with your workforce.
To accomplish that goal, MRA recommends you:
- Educate your workforce on how age and geography may impact their costs.
- Show them how much your company contributes on their behalf, so they can better understand the true value of your health care benefit offerings.
- Make different plan offerings available in an easily digestible format, such as a chart. This will help them understand which option is right for them and their families.
- Consider supplemental benefits to level the playing field if premiums on existing benefits increase.
- Develop a chart that compares key highlights of each plan they can choose from. Call out things most employees will want to know about, such as in- and out-of-network care options, copay costs and when referrals are needed. (Put yourself in the role of the health care consumer when developing content. Consider what questions or concerns you might have about a plan.)
- Figure out which types of advocacy services and digital navigation tools you can provide to help them cut through the complex web of information. Tools like these can help them select cost-effective, quality plans that will meet their needs and financial bottom lines.
- Ask them for their feedback. Perhaps employees would be willing to pay higher premiums for benefits that are particularly meaningful to them. Or maybe they can point you in the right direction if your offerings are amiss.
Measure how you stack up against industry benchmarks
If you can’t ask (or deliver on) what your employees want, consider whether your plan offerings meet or miss current cost benchmarks. For instance, KFF found that:
- Small and large firms had similar single and family coverage premiums (around $8,000 for single and approximately $22,000 for family), with slightly lower premiums for high-deductible health plans with savings options.
- Preferred provider organization (PPO) plans had higher premiums overall ($8,272 for single and $23,426 for family) and premiums were reportedly higher in the Northeast than in the South. Still, PPOs were the most common plan type for 2022.
- Generally, workers could expect to contribute 17% toward single coverage premiums and 28% toward family coverage premiums in 2022, but the contribution rates were higher among smaller organizations.
- Nearly 90% of employees had to pay out of pocket until an annual deductible was met for their coverage to kick in.
- The average deductible was $1,763 for single coverage. (At smaller organizations, that figure was as high as $2,543.)
The bottom line: Since 2017, employees have seen a 17% increase in average deductible amounts, and since 2012 that cost has risen 61%. Because such out-of-pocket expenses have become a standard cost of health care, your employees will likely expect to pay a deductible that’s close to the 2022 rate.
To offset high-deductible health plan costs, consider providing some relief through a health reimbursement arrangement or health savings arrangement.
Also gauge how satisfied your organization is with your health benefit offerings. In the KFF survey, employees were asked to rate their satisfaction with:
- Plan costs for employees
- Access to services
- Mental health offerings
- Telemedicine (Consider whether you can incorporate popular types of services like behavioral health and primary and specialty care.)
Evaluate gaps in coverage and costs
While most employers provide some sort of health insurance to their workforces, many employees are still falling through the coverage cracks. For instance, KFF notes that temporary or part-time work status and waiting periods can be a barrier. To stand out, consider ways your organization can bridge those gaps to make health insurance more accessible to a greater percentage of your workforce.
According to a recent report by the Center for American Progress (CAP), health insurance is one of the key benefits employees consider as part of their compensation package. It notes that employer-sponsored insurance can save employees from having to take out credit card debt or reduce their retirement savings to cover premium costs. Robust plan offerings can be a strong recruitment and retention tool.
That said, cost and quality of care are likely what employees will care about most. Regardless of whether you offer benefits through a health maintenance organization, point of service, PPO or high-deductible health plan, consider whether the plan’s approach to care access and cost containment will appeal to your workforce. Lower-wage workers, for example, might need lower premiums due to their earning potential. In that case, you may want to look at some options with limited provider networks, which may be available at lower costs, CAP notes.
Consider dental and vision coverage offerings, too
Finally, don’t overlook dental and vision benefits. A paper published on the National Library of Medicine’s website indicates that around 50% of workers prefer having company-provided dental care. While many larger employers offer dental coverage, many small to midsize organizations do not. Yet a recent EyeMed survey shows that 85% of adults want vision coverage.
If you can add vision and dental coverage, you can set your company apart from your competition in the war for talent. Talk to your benefits broker to see if either or both are worth considering for your workforce.