Rising employer-provided healthcare costs may increase individual market

Nearly half of Americans are paying more for workplace benefits, while exchange plans may provide a better option.

Life & Health

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Producers working in the small group healthcare market may see more of their business coming through personal rather than commercial lines, as nearly half of Americans report more money being taken from their paychecks to pay for health insurance.

According to a new report from Bankrate.com, a full 47% of Americans with employer-provided health insurance are paying more for it than they were a year ago.  Another 44% are experiencing greater out-of-pocket costs, including higher deductibles and copays.

Of this group, upper-middle-income Americans—those making between $50,000 and $74,999 annually—are the most likely to experience cost increases and to express negative feelings about their benefits package.

According to Bankrate.com insurance analyst Doug Whiteman, this dissatisfaction may lead to an increase in sales of exchange plans.

“People covered under [employer-based] plans should watch for changes and discuss with their employers how Obamacare may affect their coverage and costs,” Whiteman said. “In some cases, getting insurance through the health exchanges could be more cost-effective.”

That’s a prospect that Scott Leavitt, owner of Boise-based Scott Leavitt Insurance, has already encountered.

“Some of the companies I’ve worked with have dropped benefits because of the exchanges,” Leavitt said. “Some groups ask, ‘Am I hurting my employees by offering benefits?’”

In one such scenario, Leavitt advised a small business with 10 employees who offered benefits with a $225 premium for employees. One worker, however, discovered she could insure her family of four for the same amount, and the employer dropped coverage in the interest of its employees.

“This saves money for the company and gives workers better benefits for a cheaper price,” Leavitt said, though noting that he “really want[s] the employer system to stick around”—particularly for small businesses with fewer than 50 employees, who are not legally required to provide insurance.

Leavitt works primarily with small businesses, and he is doing his best to find coverage solutions without too much of an added expense to the company’s employees.

“What we’re doing is sitting down and educating employer groups about what affects them and what affects their employees,” he said. “In some cases, the best solution is to offer employee coverage only. If they don’t offer it to spouses, now [employee families] are eligible to get subsidies. Some go down other roads because they have employees who need family coverage.”

However, he noted that “some people fall through the cracks,” sending them back to the public exchanges.
That’s the future that John Nichols sees.

Nichols, president of Disability Insurance Group in Illinois, told Insurance Business that trends in employer benefits have steadily shifted towards an “era of personal responsibility” in which employers will eventually provide just a small stipend for healthcare services.

“This trend is more accentuated than ever, ever before,” Nichols said. “You as the employee are responsible for making donations. We’re giving you a little bit of money and you get to choose what benefits you want.”

Currently, 150mn Americans get their health insurance from an employer, Bankrate.com found.


 

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