Ask Kim


How to Beat Rising Health Insurance Premiums

Kimberly Lankford

Healthcare premiums are growing faster than paychecks -- but you can still control how much your family pays.



It seems that each year more and more of my paycheck goes to pay for health insurance. Despite periodic salary increases, I can’t seem to get ahead. I thought one of the big benefits of working was access to group health insurance, but it doesn’t seem like it is such a great deal any more. Am I wrong?

It’s not your imagination. Premiums for employer-sponsored health insurance increased160% from 1999 to 2011, while workers’ average earnings grew by just 50%, according to the Kaiser Family Foundation. Family coverage now averages $15,073 per year, and worker-only coverage averages $5,429. But most employers continue to subsidize a big chunk of health insurance premiums, so the actual cost to employees is lower: On average, employees paid $4,129 in 2011 for their share of the premiums for family coverage and $921 for single coverage.

Those are just averages, however, and the actual price can vary greatly by employer -- with some big differences between large and small employers that could affect the decisions you make during open-enrollment season this fall.

Large firms (with 200 or more workers) and small firms (with 3 to199 workers) tend to pay a similar share of the costs for individual coverage, requiring employees to contribute an average of 18% of premiums at large firms and 14% of premiums at small firms, according to the Kaiser Family Foundation study. But large and small employers take very different approaches to covering an employee’s family. Small firms require employees to contribute a whopping 35% of the cost of family coverage, on average, while large firms require an average of just 24%.

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All of this information can affect your decisions during open-enrollment season, especially if both you and your spouse work and are offered health insurance through your employers. One employer may offer a much better deal for individual coverage than for family coverage, so it can pay for one spouse to select individual coverage, while the rest of the family gets coverage through the other spouse’s plan. Or, in some cases, it could make sense for the whole family to go with one spouse’s employer plan and to bypass the other employer’s coverage completely. Run the numbers for all of the options offered during open-enrollment season this fall before deciding how to cover your family’s health insurance needs in 2012.

Premiums are just part of your family’s costs. Also look at the plan’s out-of-pocket expenses, such as deductibles and co-payments, when selecting the best plan for your family this year. Employers have been making big changes to their coverage and costs, so the plan you selected in the past may no longer be your best option. For more information about how employers plan to change their coverage and pricing for employer-based health insurance in 2012, see Expect to Pay More for Health Coverage Through Work.

Got a question? Ask Kim at askkim@kiplinger.com.



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