HR Policy continued its series on HR issues and inflation focusing on the impact of inflation on health care costs and how employers can mitigate future price increases, while focusing on effective benefits design.
Employer health care costs for family coverage remained stable in 2022, but are expected to jump next year because of inflation, according to the latest Kaiser employer benefits survey. The cost for family coverage rose only 1.1% to $22,463, with employees paying 27.2% of that cost. Additionally, since premiums and provider contracts are typically set a year in advance, employers have not yet seen the impact of inflation on health care prices.
Overall U.S. health plan cost trend for 2023 is estimated at 7.0%, with 43% of employers with 500 or more employees expecting the actual cost of health benefits in 2023 to exceed their budgeted amount. Mr. Marcotte pointed to the fact that many employees delayed care during the pandemic and as a result employers are seeing an increase in late-stage cancer diagnoses.
Companies have long held affordability as a principle when designing benefit offerings. Tom Plath, Senior Vice President, Human Resources and Global Citizenship, International Paper Company, noted it is the company’s responsibility to know where their health care expenses are going so invest in benefits experts, use data to understand the value of your offerings and use tools to evaluate fraud and waste. Employers can address affordability not just in contracts but in communications with employees. Katie Lawler, SVP and CHRO, Illinois Tool Works Inc., said after realizing some employees are overpaying because they are essentially over insuring themselves, they use data to help employees choose the right benefit offerings.
Many employers are reevaluating their benefit design amid a tight labor market and growing employee expectations regarding health care benefits,. Jonmichael Daly noted that Lincoln Financial Group has started looking at health care benefits as part of the entire total rewards package, rather than keeping employee benefits siloed. More frequent evaluation of benefit design has also allowed them to benchmark plan costs as well measure the effectiveness of benefit design changes.
Access a full recording of the webinar here.
