Cost of family health insurance tops $22,000 this year

The cost of employer-sponsored insurance plans continues to rise at a relatively steady rate even as a global pandemic has caused dramatic disruptions in how and when people get health care.

The findings, released Wednesday, come from California-based Kaiser Family Foundation's yearly report that put the average annual premium for family coverage this year in employer-sponsored health plans at $22,221, up 4% from last year. The national survey found that workers are contributing $5,969 toward the cost of family coverage this year, with employers paying the rest.

Of note, the survey found employers are expanding access to mental health services after the COVID-19 crisis exposed that need and promoting telemedicine services that allow for health care at a distance.

"No matter how you slice it, the aggregate cost of covering a family adds up," Matthew Rae, an associate director of the foundation, said during a media call Wednesday. "Compared to the rapid premium increases of the early 2000s, we saw relatively modest premium increases this year. On average, family premiums increased about $900."

The survey of nearly 1,700 small and large employers is one of the largest annual looks at premium trends across a wide cross-section of U.S. firms that provide health insurance benefits.

Since 2011, average family premiums have increased 47%, the report shows, which is faster than the growth rate during the time period for wages (31%) or inflation (19%).

Use of health care services took a big hit during spring 2020 when the pandemic first began, driving a shutdown of non-emergency services across the country.

About half of large employers with at least 200 workers said that during their most recent quarter, health-care utilization among its covered employees was about what they expected. Nearly one-third said utilization was below expectations while 18% said it was greater than expected. The results fit with other evidence, researchers said, of a slowdown in total health spending during the pandemic.

The rate of increase for 2021 fits with the trend over the past decade, according to the Kaiser survey, with annual cost increases in family coverage ranging from 3% to 5% every year since 2012.

"In a year when the pandemic continued to cause health and economic disruption, there were only modest changes in the cost of employer-provided health benefits," Gary Claxton, a senior vice president at the foundation, said in a statement. "Some employers adapted their plans to address mental health and other challenges facing their workers due to COVID-19."

Employer-sponsored health plans are the single largest source of health insurance coverage in the U.S. with enrollment of about 155 million Americans.

The survey finds 59% of employers offer health benefits, which is largely unchanged over the past decade. Nearly all firms with at least 200 workers offer coverage compared with 56% of firms with fewer than 50 workers.

On average, covered workers contribute 17% of the premium for single coverage, according to the survey, and 28% of the premium for family coverage.

Most covered workers must pay a share of the cost when they use health care services, with many facing a general annual deductible that must be met before most services are paid for by the plan.

The average deductible with single coverage stands at $1,669, similar to recent years but up significantly since 2011, when it stood at $991. This year 85% of covered workers have a deductible in their plan, the survey found, up from 74% a decade ago.

The survey found that a significant share (39%) made changes to mental health and substance abuse benefits since the start of the pandemic. Nearly one-third (31%) increased how enrollees could access mental health services, such as via telemedicine programs.

About 1-in-20 employers said they expanded their networks of mental health care providers and/or reduced cost-sharing fees for workers accessing those services. Overall about 12% of employers with at least 50 workers that offer health benefits reported an increase in use of mental-health services.

New federal rules will require insurers to make information available to enrollees about the estimated cost of services and cost sharing on a "real-time" basis. The survey found 26% of large employers offering health benefits believe the information will help with health care decision-making "a great deal," although only 3% of large employers said the new transparency rules would reduce health spending "a great deal."

In a write-up of the survey results being published in the journal Health Affairs, researchers at the foundation said the COVID-19 pandemic remains the most important story of 2021 including how employers are adapting benefits as a result.

"Overall market characteristics changed little: premiums continued on a modest growth trend, the share of people offered coverage at their work and the share of those covered by their jobs remained unchanged, as did the average deductible and other cost-sharing levels," researchers wrote.