Premiums Going Up

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Premiums Going Up

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Health insurance’s annual enrollment is underway. Prices are going up as usual.

Difficult to swallow

Difficult to swallow

In a few cases, benefits are being cut to make the premium increase a little more palatable.

♦ Employers expect the cost of insurance to jump 9% on average for next year. Workers with larger companies can expect their employer to shoulder most of this cost increase.

Employers of all size are continuing to try to control costs by steering employees to networks with lower-cost providers. Prescription benefits are a favorite for tinkering to discourage people away from expensive drugs in favor of lower cost alternatives.

• Weight-loss drugs and cutting-edge gene therapies are all the rage these days. These drugs are expensive and few employers are willing to put them on their drug lists.

Add to this list, treatments for infertility, such as in vitro fertilization.

♦ KFF found that about 25% of larger employers (5,000 or more employees) are planning to cover some weight-loss drugs. But many are going to impose conditions, such as seeing a dietitian or trying a traditional weight-loss program first. This should be expected because some of these weight-loss drugs can cost thousands of dollars a year per person.

Why might some large employers cover expensive weight-loss drugs? Pressure from employees is a big factor.

• About 25% of larger employers are also expect to cover some infertility treatments.

Smaller employers are always the most affected by increased costs. About a third of smaller employers will shift more costs to employees through higher premiums and higher cost sharing in the form of high coinsurance and deductibles.

♦ The average deductible for small companies (less than 200 workers) is running around $2,500 while larger companies are averaging around $1,500.

Employers have seen the total cost of premiums for family coverage rise 24% over the past five years, while their workers’ portion rose 5% over the same period.

• No matter how you crunch the numbers, employees are going to have to pay more for the same or even less coverage next year.

It is estimated that it costs on average just over $25,000 annually for family coverage with workers being asked to cover roughly $6,000 of this.

Roughly 154 million Americans rely on employers for health insurance. And another 20 million are receiving insurance through the Affordable Care Act (Obamacare).

Alternative plans

There are some insurance companies starting to push their idea of alternative coverage to employers.

One concept is plans that are designed to encourage employees to focus more on primary care through the use of no deductible and zero copay when visiting a specific network of primary care doctors.

• A weak point in this concept is the steady loss of primary care physicians. This concept sounds good except that as workers age, they are almost always directed by their primary care doctor to see a specialist for everything short of a common cold.

It is likely that that these “primary care focused” plans will restrict specialist networks and push more specialist costs toward the employee as a means to keep plan premiums down.

As more employers jump on the wagon, we will better understand the positive and negative aspects of these plans. Right now, best advice is to read plan documents carefully, compare the benefits to your health situation and be cautious.

In summary

Rising costs for health insurance is nothing new. It is a yearly event. We just have to cross our fingers and hope for the least pain.

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