Expect higher health insurance premiums, but not much higher

Benefit costs may rise by up to 6 percent. Analysts say many employers may not pass the full increases, fearing workers will be fired away.

Expect higher health insurance premiums, but not much higher

Analysts say work-based health insurance premiums may rise next year, although employers may not pass the full increase on for fear of alienating their workers.

More than half of Americans get health insurance through their employer, and many plans are now in the midst of open enrollment, where workers can sign up for coverage or change options for the next year. 

(Open enrollment is also underway on state health insurance exchanges for people who lack workplace coverage.)

This year's average premiums for employer-sponsored family health insurance haven't budged from last year, according to a report from the Kaiser Family Foundation. But higher inflation this year, as well as patients returning to pre-pandemic levels of doctor visits, suggest larger increases are coming.

“Inflation that occurred across the economy in 2022 could drive prices higher, leading to premium increases in the coming year,” the Kaiser report said. The report is based on a survey of more than 2,100 randomly selected employers from February to July.

Employers surveyed by HR consultants like Mercer and WTW estimated that their healthcare costs will increase by 6 percent on average next year. But employees may see more modest increases in their contributions to insurance paychecks. While the job market is declining somewhat, employers may still worry that if they push costs too high, workers will leave and take another job, said Gary Claxton, senior vice president at Kaiser Corporation.

“You don't want employees to be unhappy about their benefits,” he said.

In a WTW survey of 455 employers, only a quarter said they plan to transfer costs to workers through higher premium contributions.

Workers pay on average more than a quarter of the cost of health insurance premiums, while employers pay the rest. This year, the median annual premium for family coverage was $22,463, up 1 percent from $22,221 last year, Kaiser found. On average, workers this year are paying $6,106, or about $509 per month, as a share of household coverage.

But Kaiser found that workers at smaller employers -- those with fewer than 200 workers -- pay nearly $2,000 more annually on average than workers at larger companies.

The majority of employers said they would not shift costs to workers by increasing deductibles (the amount employees must pay before insurance coverage begins) or co-payments (a fixed amount workers pay when they visit a doctor), Mercer found. Kaiser said the average deductible for individual coverage this year is $1,763 — similar to last year but up nearly $1,100 since 2012 — and average co-pays $27 for primary care and $44 for specialists.

Workers are likely to see more options for mental health care — but may have to wait for appointments. Employers report increased demand for mental health services, Kaiser found, and more than a quarter of large employers said they have added mental health providers to their networks, both for in-person and online therapy. However, about 30 percent said their networks lacked enough mental health professionals to give workers access to timely care.

For people who don't have insurance through a job and don't qualify for government programs like Medicare or Medicaid, open enrollment at HealthCare.gov, the federal health insurance marketplace, began Tuesday. Open enrollment is also underway, or will begin soon, in the 17 states (plus the District of Columbia) that operate their own exchanges.

The good news is that the extended premium financial assistance, which was first provided as part of the federal government's pandemic relief program, has been extended through 2025 by Congress as part of the Inflation Reduction Act. As a result, the "vast majority" of people who buy insurance in the Affordable Care Act market receive benefits that lower their premiums, according to a separate report from Kaiser.

The Centers for Medicare and Medicaid Services, the agency that oversees HealthCare.gov, said. Four out of five customers can find plans for $10 a month or less, after tax credits.

In addition, the "family glitch" loophole, which prevented some family members of low-paid workers from qualifying for financial assistance with market premiums, has been fixed for 2023.

People who do not qualify for market benefits may see premiums increase next year at a rate of 4 percent for the reference plan, a change from recent year-on-year declines. But because more generous subsidies are extended, people who did not previously qualify for financial aid may now qualify, so they should shop online to see if it makes sense to change plans.

“People should be encouraged to come back and see what they qualify for,” said Katie Keith, director of health policy and law initiative at Georgetown University Law Center.

Here are some questions and answers about open enrollment:

How long does open registration take in the workplace?

Open enrollment for workplace plans varies, but periods of two to four weeks are typical. If you're not sure of your employer's deadline, check with your human resources office.

How long is the open registration period for market coverage?

Shoppers have until January 15 to choose a plan on HealthCare.gov for 2023. (If you want coverage to start on January 1, you generally must register by December 15). 

The "special" registration period if you have had a change in your life, such as marriage, divorce, or losing your job. Also, some low-income people can enroll in market plans throughout the year.

Some state-run markets have different start and end dates, so check their websites for details. Cadence Acquaviva, a spokeswoman for the state health department, said the registration period in New York for 2023 coverage, for example, begins on November 16, but people can continue to register until November 15 to cover for the remainder of this year.

Where can I get help choosing health insurance plans in the market?

Funding for "navigators" who can help evaluate options has been greatly increased. You can search online for local help. To find out if you qualify for subsidies, try Kaiser's Online Market Calculator.

Open enrollment is a fertile time for fraud, according to the Better Business Bureau. Be wary of unsolicited calls or messages proposing health insurance deals or seeking personal information, and contact the market directly to confirm if the call is legitimate. HealthCare.gov offers tips for avoiding health care fraud, as does the Federal Trade Commission.

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