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Employees will pay more for insurance in 2014

According to experts at the Employee Benefit Research Institute, a non-partisan think tank in Washington, employees who are receiving health insurance through their employer should be prepared to pay more for insurance in 2014. Several things we can expect are higher deductibles and copayments and lower employer contributions for family coverage. The new changes could affect as many as 150 million Americans.

Who is to blame for increased healthcare costs?


While some of the blame squarely falls on the Obama Administration and changes wrought by the new healthcare law, some of the increased cost predate the act and have been trending upwards for years due to the increased cost of providing health insurance.

But experts suggest that changes in the new healthcare laws may be one of the main contributing factors. According to an article published today by USA Today, “Employers can now compare their own offerings with the policies sold through the health law's websites, some of which come with higher deductibles and cost-sharing.”

This means that some employment plans, which typically covered 80% of expected medical costs, may be downgraded to match bronze plans sold through the exchanges. These plans are the lowest level plans sold in the health care marketplace, and they only cover 60% of an employees’ estimated costs. Some employers have started working with their insurance companies to offer lower tier plans to their own employees.

The bottom line is employers are looking for new and creative ways to lower their costs for providing health insurance, which will be required by law next year for large employers. Employers who do not offer insurance will be forced to pay a fine.

When will employees see the cost increase?


While it is likely costs will creep up in 2014, most of the changes will happen in 2015 as certain companies are forced to offer insurance to full-time workers or pay a fine. Although this mandate has been delayed until 2015, don’t be surprised if insurance costs increase this year as well.

Many employees could also lose insurance coverage. Job experts argue that while the largest companies are unlikely to drop coverage completely, small companies might. In fact, Mercer, a consulting company, released a report last month which estimated up to 31% of smaller firms may have to eliminate insurance coverage for their employees, forcing those employees onto the exchanges. And many companies are deciding whether it is more cost effective to pay the fine rather than provide insurance coverage.

Employees who pay costs have “skin” in the game


But the question remains: Is it good that consumers are paying more and now have “skin in the game”? Some say yes. In the last several decades with the increased use of insurance, consumers lost sight of the true costs of medical services. Analysts now have decided that if consumers have some “skin in the game,” especially with higher deductibles, they might shop around and make better choices about their health care.

So are higher deductibles good or bad? Well, the answer is both. High deductibles do discourage unnecessary medical expenditures, but they also discourage individuals from seeking some necessary types of medical care.
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