Employers To See Rising Medical Costs

Companies that provide employee health insurance benefits are seeing costs climbing steeply next year. This means more employers will be asking workers to dole out a bigger fraction of the expense. Health insurance deductibles in most American companies are expected for the first time go up to more than $400.

A couple of years ago, roughly 25 percent of companies have asked employees to pay deductibles of $400 or more. That number has grown to 43 percent in 2010 and is expected to surpass 50 percent next year. This will probably mean less employees using health care because of the increasing deductibles.

Medical costs are expected to increase by as much as 9 percent next year. However, this will probably not mean workers will see their monthly premiums go up by the same amount. Employers will often try to soften the impact of a cost increase by paying for some of it, changing insurance plan designs or asking employees to pay higher deductibles or a larger coinsurance percentage.

In 2009, the average annual premium rose only 5 percent for family coverage that year and stayed flat for single coverage. The increase predicted for next year is actually smaller than the 9.5 percent rise in health insurance costs this year. Many top-selling drugs will be losing patent protection next year and this will help keep costs down.

Fewer employers will also be subsidizing retiree health coverage. Last year 37 percent of employers that have more than 5,000 workers gave subsidies for health insurance coverage to their retirees. This year that number is down to 22 percent.


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