Employer Health Benefit Costs Expected to Rise 5% Next Year

Workers, get ready to pay more for health benefits next year.

A physician assistant of family medicine wearing a stethoscope during an examination is seen in a file photo. (Credit: Joe Raedle/Getty Images)

Total costs for on-the-job health care benefits are expected to rise an average of 5% in 2018, surpassing $14,000 a year per employee, according to a National Business Group on Health survey of large employers. Specialty drugs continue to be the top driver of increasing costs.

Companies will pick up nearly 70% of the tab, but employees must still bear about 30%, or roughly $4,400, on average.

This year, the total annual cost of benefits was nearly $13,500. Employers paid about $9,300 in premiums and contributions to employees’ health savings accounts. Workers shelled out about $2,750 in premiums and another $1,400 in out-of-pocket costs for care, the industry group found.

Costs would have risen more, but companies will adjust their benefits packages to rein in expenses, as they do every year. This is the fifth year in a row that employers are keeping the increase to 5%.

Employer benefits are often more generous and less costly than coverage purchased on the individual market. Many insurers are asking for double-digit premium hikes on their Obamacare policies for 2018.

To keep costs under control, nearly 40% of companies will offer only high-deductible plans next year, compared to 35% this year. Some 90% of firms will offer a high-deductible plan as an option, but that figure is expected to rise to 97% by 2020.

Companies are also looking to make health care more accessible. Some 54% will offer health centers on or near their locations, and that number could grow to nearly two-thirds by 2020. Nearly all employers will offer telehealth services in states where it is allowed.

Employers will also offer more health-related tools and services for their workers, such as providing care management to those with diabetes and other chronic diseases, said Alisa Ray, vice president at the industry group. And companies will seek to direct employees to particular hospitals and doctors based on their cost and quality.