Group health insurance premiums increased +5.6% from 2013 to 2014. But despite the modest increase, small businesses are bracing for larger increases in 2015. This is according to The United Benefit Advisors' (UBA's) 2014 Health Plan Survey, a large national independent benefits benchmarking survey of employer-sponsored health insurance.
The survey is based on responses from 9,950 employers sponsoring 16,467 health plans nationwide. Among the key findings are that group health insurance premiums continue to rise, Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs) are growing in popularity, plans in the Northeast continue to cost more, Preferred Provider Organization (PPOs) plans maintain their popularity, and more.
Increase in Group Health Insurance Premiums
Though modest, premiums increased in 2014 by +5.6% for all types of plans. This number is up from last year’s +5.55%. However, the survey found a 322% increase in the number of plans utilizing an early renewal strategy on December 1, 2013. Early renewal delayed the effects of the Affordable Care Act (ACA) until December 1, 2014, and 94% utilizing early renewal were small businesses.
According to the survey, the early renewal strategies kept rates in check for 2014, but rate increases are on the horizon for small businesses currently offering employer-sponsored group health insurance.
HSAs and HRAs Rising
In 2014, 33.6% of all plans offered were paired with an HSA or HRA. The average employer contribution for an HRA was $1,750 for a single employee and $3,461 for a family. Furthermore, there was a significant increase in individuals who enrolled in HSA plans at 38.6%. This increase was likely caused by the increase in Consumer Driven Health Plan (CDHP) enrollment.
Plans in Northeast Continue to Cost More
The overall increase in healthcare cost that the average American employee saw was due to higher in-network deductibles, in-network co-insurance, and significantly higher out-of-pocket maximums. As plans continue to increase, the Northeast maintains a higher cost for health insurance plans.
The survey found this is typically because they have low or no deductibles, contain more state-mandated benefits, and have higher in-network coinsurance. As a result, Northeast employers will need to be mindful of the upcoming “Cadillac tax.”
According to the survey, while average in-network deductibles remained fairly level at $1,901, out-of-pocket maximums for 2014 increased more than 6% over last year. The median single out-of-pocket maximum is $3,500 (an increase of $500), and median family out-of pocket maximum is $8,000 (an increase of $1,000).
Other Interesting Trends From the Survey
Type of Health Insurance Coverage - PPOs are still the most popular type of health insurance plan increasing to 47.8% in 2014.
Self Funding - Overall, 11.1% of all plans are self-funded. By contrast, 80% of all large employer (1,000+ employees) plans are self-funded.
Spouse/Partner Coverage - 62.3% of all employers provide no domestic partner benefits (a trend that has remained unchanged for the past three years), 28.4% provide coverage for both same-sex and opposite-sex domestic partners, 5.5% provide same-sex coverage only, and 3.7% provide opposite sex domestic partner benefits only.
Click here to read the full UBA Health Plan Survey.
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