Background

This year almost 1900 interviews were conducted with public and private firms across the U.S., asking about their 2016 premiums, employer/employee contributions, plan cost-sharing provisions, and employer wellness programs.  A distinction is made between small groups (2-50 employees) and large groups (over 50 employees).

Premiums and employer contributions:

This is the 5th year of relatively low premium increases, between 3-4% in 2016, but overall deductibles and enrollment in High-Deductible Health Plans (HDHPs) have continued to increase, which likely accounts for part of that premium stability.  While premiums vary significantly depending on the size of the company, the region, and their compensation decisions, the average annual premiums for employee only coverage was relatively close to last year at $6,435, and family health coverage was 3% higher at $18,142.  The majority of covered workers make some type of premium contribution toward their benefits, on average 18% for single coverage and 30% for family coverage.  Workers are paying an average of $1,129 annually towards the cost of single coverage and $5,277 for family coverage.  While those amounts have not changed much over last year, the amount that families pay towards the cost of coverage has increased by 78% since 2006 and 28% since 2011.  It’s notable that many companies have shifted to HDHP plans, where the company can still offer the same contribution amount, but employees may be bearing a larger cost-sharing in those HDHP plans.

Plan types and member cost-sharing:

PPO plans are still the most common type of plan in 2016, which have 48% of workers, while HMOs have 15% and POSs have 9%.  Over the past 2 years, enrollment in PPO plans has declined by 10%, while enrollment in HDHPs saw an 8% increase.  83% of workers now have deductibles on their employer-sponsored plans, and the average individual deductible amount has grown from $991 to $1478 over the past 5 years.  However, many employers are either contributing to members’ Health Savings Accounts (HSA) or refunding part of the deductible amounts through a Health Reimbursement Arrangement (HRA).  When those employer contributions toward the individual deductible amount are factored in, the percentage of workers with a net deductible of $1,000 or more is reduced from 51% to 38%.

There was a decrease in the offering of high performance or tiered network plans, down from 24% last year to 14% in 2016.  13% of workers in small firms and 82% in large firms are enrolled in a plan that is partially or completely self-funded, representing 61% of covered workers overall.  Only 7% of firms reported using a narrow network plan, 2% of large firms are using a private exchange, and 4% of small firms are using a Professional Employment Organization (PEO).  23% of firms have at least one grandfathered plan as defined by the ACA, down from 35% in 2015.

Small groups versus large groups:

It’s worth noting that small groups differed greatly from large groups in the types of plans offered, the contribution levels toward the premiums, and the deductibles on the plans.  Workers in small firms are paying more in contributions, even in firms that have more low-wage workers than others.  Also, the average deductible for covered workers is higher in small firms than in large ($2069 vs $1238).  The percentages of smaller firms offering coverage has fallen since 2011, from 74% to 66% in 2016.  Likely partially because of the ACA mandate, 97% percent of firms with over 50 full-time equivalents (FTEs) reported that they offer coverage to at least 95% of their workers.  Overall it appears that the smaller firms are having the most difficult time of providing affordable benefits to their workers, and that these workers are having to bear a larger burden of premium costs and plan cost-sharing requirements.

Wellness programs and incentives:

15% of covered workers are in a plan that requires tobacco users to contribute more towards the premium.  Employers continue to show interest in programs that engage their employees in taking better control of their health, and many provide incentives to do so.  32% of small companies and 59% of large provide their employees an opportunity to complete a health risk assessment, and 51% of larger firms offer a contribution incentive to participate.  20% of small firms and 53% of larger offer employees a biometric screening, and the majority of those firms offered some type of financial incentive to do so (premium incentives, cash rewards, or merchandise).  14% of large firms that offer biometric screenings have financial incentives tied to an outcome-based result, such as being able meet a specific biometric outcome such as a healthy BMI or improvement from last year’s results.

Other Facts:

Telemedicine has become popular, with 39% of large firms indicating that they offer some type of telemedicine program to their employees.  When it comes to retail health clinics, or those found in supermarkets or pharmacies, 60% of small firms and 73% of large firms reported these services being covered under their health plan.  Only 5% of large firms are offering some type of on-site health clinic.

The Cadillac Tax, expected to begin in 2020, may have an impact on future plan strategies.  In 2016, 29% of small firms and 27% of large firms report that their plan would exceed the threshold for the tax in 2020.  Many of these companies are reporting that they have already begun to take action to avoid this tax, by switching to lower-cost plans or increased cost-sharing.

If you wish to read more about this survey, please go to http://kff.org/report-section/ehbs-2016-summary-of-findings/.