Employer Health Insurance Premiums Have Risen 22% in 5 Years and Wages Can’t Keep Up

Family doctor examining throat of a small black boy while visiting him at home during coronavirus pandemic.
Drazen Zigic / Getty Images/iStockphoto

With so much attention paid to the skyrocketing cost of consumer goods, many Americans might not have noticed how expensive their employer-sponsored health insurance plans have gotten. But a new survey from the Kaiser Family Foundation spells it out: Premiums for family coverage have risen by more than one-fifth over the last five years and nearly one-half over the last 10.

See: Here’s How Much More Expensive Healthcare Is in the US Than 5 Other Countries
Find: How to Refinance a Mortgage

The average annual premium for employer-sponsored health insurance in 2021 is $7,739 for single coverage and $22,221 for family coverage, according to KFF’s annual Employer Health Benefits Survey, which was released on Wednesday. Those numbers represent a 4% increase from last year. Over the same time frame, workers’ wages have risen by an average of 5% and inflation has increased by 1.9%.

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The average premium for family coverage has surged 22% since 2016 and 47% since 2011.

See: HealthCare.gov Open Enrollment Starts Nov. 1 – Here’s Everything You’ll Need to Sign Up
Find: Should You Redo Your Healthcare Plan? Here Are the Pros and Cons

The survey was conducted during the first half of the year, while many Americans were being vaccinated for COVID-19. Among the interesting developments that have taken place since the beginning of the pandemic:

  • Seventeen percent of smaller companies (50-199 employees) and 34% of larger companies have expanded or modified the content of their existing wellness programs to better address the health needs of people working from home.
  • Thirty-eight percent of smaller firms and 58% of larger ones provided or expanded on-line counseling services for emotional or financial distress, relationship issues or other stressful situations.

Many of those workers have, no doubt, faced financial stress — especially in the face of rising inflation across all sectors of the economy. As GOBankingRates previously reported, even a recent bump in wages hasn’t been enough to offset higher costs. According to the U.S. Department of Labor, top-line inflation for October was nearly 1%, while average hourly earnings for the month only increased 0.4%. The Bureau of Labor Statistics estimates that real average hourly earnings actually decreased 0.5% in October.

See: 10 Companies That Offer Health Insurance to Part-Time Employees
Consumer Sentiment Remains Low, Gains Edged Out by Highest Rate of Inflation Uncertainty in ‘Nearly 40 Years’

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Americans strapped by skyrocketing health-insurance premiums might have to look for ways to cut health-care costs in other areas. Here are some options:

  • Save on medications by choosing generic prescriptions, looking for less expensive over-the-counter brands or buying in bulk through a mail-order service.
  • If you don’t have any chronic or pre-existing medical conditions, consider choosing a high-deductible insurance plan if your employer offers one. You’ll likely have to pay a lot of money out-of-pocket before the insurance kicks in, but you will also have much lower premiums.
  • Take preventive health measures to reduce your risk of illness. This includes using your benefits for routine check-ups and screenings as well as eating healthier, exercising regularly and lowering your consumption of harmful substances such as alcohol.
  • Take advantage of any health spending accounts or flexible spending accounts your employer offers. These work like savings accounts that let you set aside pre-tax money for health care expenses, which can lead to hundreds of dollars in savings every year.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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