Why Employers are going to get Tough on Insuring Families

The soaring costs of health insurance show it is increasingly evident that employee benefits are unsustainable at current levels. Whilst federal government figures assume medical inflation of 4%, this is far beneath the actual increases which employers face when insuring their work force, with real figures of 9% -10% per annum increases. There has already been a steady decline in employee cover with figures from Thomas Reuters showing employer coverage is now down to 54.6%.

Current figures indicate that 133 million Americans have health insurance through companies that employ more than 100 people. However many of those employers are cutting back in an effort to manage costs, with some planning to actually drop health insurance as a benefit. Companies need to offer good coverage to attract and retain the best employees, and are considering other moves to reduce the expense which is predicted to rise year on year.

The National Business Group surveyed 507 companies with more than 100 employees to find out what measures businesses were considering to combat the rising costs of insuring their workforce. Spousal surcharges are one measure planned by many companies. Spousal cover is proving expensive, as some employers finance this unnecessarily as spouses simply waive their own employer insurance cover for a dollar amount. This leaves one company carrying the expense of spouses who have their own access to cover. Spousal surcharges are expected to increase significantly.

Full coverage is often offered to an employee’s dependent family, yet the situation has been abused. Some employees sign up ineligible, non-dependent family members, and may well be expected to reimburse any money they claim.

Many companies are introducing or contemplating health screening, and some are withdrawing cover from employees who increase overall premiums due to obesity, which costs companies more. Biometric screening will not only target the obese, but those with high blood pressure and high cholesterol levels, in an effort to reduce coverage of high risk employees who could make lifestyle changes which would in turn reduce premiums. Many companies incentivise employees to make changes which will result in improved health, whilst others are simply withdrawing coverage.

The dramatic escalation in insurance costs forces employers to cut back. Currently 56% of employers have said they will hold employees responsible for a greater share of the costs. Employees will be expected to contribute more to premiums as well as facing higher deductibles. Some employers have already frozen their own contributions. Predicted heavy rises in insurance premiums make it inevitable that employers will get tough on insuring families.

Sources: Washington Post

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