The cost of providing employer-sponsored healthcare benefits in the United States is expected to increase 4.4% this year, a slight uptick from 2013, according to a survey.

The Towers Watson and National Business Group on Health survey finds that employer costs are expected to reach US$9,560 per employee in 2014, up from 2013’s level of US$9,157. Health cost increases fell to a 15-year low of 4.1% in 2013.

In response to rising costs, employers continue to shift costs to employees. The survey found the employees’ share of premiums increased nearly 7%, to US$2,975, this year. Out-of-pocket costs also increased. The total employee cost share has climbed from 34.4% in 2011 to 37% in 2014. Employees now pay an additional US$100 more each month for healthcare compared with just three years ago.

“Despite the moderation, healthcare costs continue to outpace inflation and remain a major concern for U.S. employers given the challenging macroeconomic environment,” says Ron Fontanetta, senior healthcare consultant for Towers Watson. “To find more effective ways to manage health costs, many employers are focusing on reshaping their health strategy for the next three to five years.”

Indeed, while the vast majority (95%) of respondents indicate that subsidizing healthcare coverage for active employees is a very important part of their rewards package, almost as many (92%) expect to make moderate to significant changes to their programs by 2018.

One of the many changes employers have been implementing and expect to continue making is to their contribution strategies for spouses and dependents. Forty-nine percent of employers have increased employee contributions for dependent tiers at higher rates than for individuals. Another 19% expect to make this move next year. About one-quarter (24%) of companies now use spousal surcharges of roughly $100 per month when other coverage is available to the spouse.

Only 56% of companies believe that subsidized healthcare for spouses will be very important for 2015 and beyond—down from more than 70% today, an indication that the trend toward increased cost sharing for spouses will likely continue.

Exchange options
Two-thirds of companies believe that private exchanges will offer a viable alternative to employer-sponsored coverage for active employees as early as 2015.

“While private exchanges are proving to be an effective option for retiree health coverage, most employers are taking a wait-and-see approach to gauge whether these models can deliver greater value for their active employees than self-managed programs,” says Helen Darling, president and CEO of the National Business Group on Health. “Additionally, employers that no longer want to sponsor healthcare benefits could send their employees to a public exchange, although confidence in those remains quite low.”

The survey was completed by 595 employers. They collectively employ 11.3 million full-time employees, have 7.8 million employees enrolled in their healthcare programs and represent all major industry sectors.

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Copyright © 2020 Transcontinental Media G.P. Originally published on

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