With the end of summer begins our march toward the end of the 2012. For Human Resources professionals, they begin to brace for the words they dread all year, "Your medical rates are increasing." Then after a big sigh, the inevitable question follows: "How much this year?"
For California Public Employees' Retirement System (CalPERS), their overall rate increase effective January 1, 2013 was 9.5%. Broken down, their non-Medicare HMO plan increased by 8.7% and their non-Medicare PPO plans increased by 13.9%. Why should we care about the CalPERS rate renewal? CalPERS insures over 1.3 million people in California, and their renewal is a key indicator of the medical rate trends other employers can expect to experience going into 2013.
Whether or not your medical rate renewal compares to the numbers experienced by CalPERS, all indicators point to your medical rates increasing in 2013. The question is now: How can you challenge this trend and beat the market while still maintaining a competitive benefits package for your employees?
More than ever, there are many different strategies employers can entertain as they look to control costs. Alternative strategies gaining popularity are self-funded plans, high deductible plans, health savings accounts (HSA), health reimbursement arrangements (HRA), defined contribution plans, and voluntary benefits. As you review all your options, it is prudent to see what the national trends are relating to plan costs and plan designs.
A key step we, at i2i benefits, use with our clients is benchmarking their benefits package against trusted national survey data. In this post, we are highlighting the recently released Kaiser Family Foundation Employee Health Benefits Annual Survey. This survey provides valuable data on the trends for small and large employers broken out by industry and region.
Kaiser Family Foundation 2012 Benefits SurveY
The 2012 survey is based on responses from 2,121 randomly selected public and private employers with an employee population ranging from three to 200+ employees. The data was collected between January and May 2012. Below is a highlight of a few key findings from the 2012 Benefits Survey.
Compared to 2011, the single coverage premium increased by 3%, and the family coverage premium increased by 4%.
- $466 for single coverage within a small firm (2-199 employees)
- $469 for single coverage within a large firm (200+ employees)
- $1,271 for family coverage within a small firm
- $1,332 for family coverage within a large firm
Employee Premium Contributions
On average, employees contribute 18% of the premium for single coverage, and 28% of the premium for family coverage.
- $70 for single coverage within a small firm
- $83 for single coverage within a large firm
- $427 for family coverage within a small firm
- $327 for family coverage within a large firm
Of the total employers, 16% require no employee premium contribution on single coverage and 6% require no employee premium contribution on family coverage.
Medical Plan Enrollment
Enrollment in HDHP (High Deductible Health Plan) did not increase significantly in 2012, but since 2009, the enrollment has increased by 11%.
- 56% of employees enrolled in PPO plans
- 19% of employees enrolled in HDHP plans
- 16% of employees enrolled in HMO plans
- 9% of employee enrolled in POS plans
Medical plan design
Since 2006, the PPO annual deductible for single coverage has increased by 54%.
Medical plan designs contain cost sharing through both a copay and/or coinsurance. The following are the average in-network copay and coinsurance levels found among all plan options:
- Average PPO deductible for single coverage is $773 and $2,163 for family coverage
- Average HDHP deductible for single coverage is $2,086 and $3,924 for family coverage
- Coinsurance on PPO plans - 17%
- Coinsurance on HDHP plans - 19%
- Primary care office copay per visit - $23
- Specialty care office copay per visit - $33
- Emergency room copay per visit - $118
- Outpatient surgery copay per surgery - $127
- Inpatient copay per admission - $263
- Inpatient copay per day - $221
- Generic drug copay - $10
- Brand name formulary drug copay - $29
- Brand name non-formulary drug copay - $51
- Speciality drug copay - $79
Employers continue to work on finding the most effective way to promote wellness to their employee population. Of employers offering health benefits, 63% offered at least one of the following wellness programs:
- Weight loss program
- Gym membership discounts
- Biometric screenings
- Smoking cessation programs
- Personal health coaching
- Nutrition/Health Living classes
- Web-based health living resources
- Wellness newsletter
This is a glimpse into the extensive survey results from the Kaiser Family Foundation Employer Health Benefits 2012 Annual Survey. The full survey provides many interesting and relevant statistics on health costs and plan design trends.
Next week, we will focus our post on the factors related to group renewal rates and how you can work to receive the most competitive renewal. If you have any questions, you may contact i2i benefits at firstname.lastname@example.org.