2 Work-Arounds for the Spike in Health Insurance Costs

Employers should be aware that health care premiums are expected to rise by 5% in 2017, according to the National Business Group on Health. This is in line with recent trends, with health insurance costs rising because of pharmacy costs, high-cost claimants, and overall medical inflation. With the open enrollment period from Nov. 1 to Jan. 17, consumers are weighing their options.

Although the hike isn’t a surprise, it’s problematic for employees and employers. National Business Group on Health CEO Brian Marcotte called the expected increases “stable” but “unsustainable and unacceptable” given that health care costs are rising at twice the rate of inflation and wage hikes, according to Fortune.

However, employers can help employees make the most of their coverage by offering education on how to choose a health insurance plan. Obama administration officials have said that many consumers could actually lower their costs next year despite the hike by taking advantage of tax breaks and finding the best coverage.

Subsidies to Cover Costs

There are significant tax breaks available to any individual or family making 400% of the poverty level or less. Yet two-thirds of uninsured Americans are unaware of these advantages, according to Kaiser Health.

The Advanced Premium Tax Credit (APTC) helps lower monthly health premiums for any household with an income between 100-400% over the poverty line. This means that individuals making $44,000 or less and a household of four with an income of $97,000 or less would be eligible. The APTC knock off $100 on health care premiums each month.

For those with incomes at 100-250% above the federal poverty level, Cost Sharing Reductions (CSRs) are also available. CSRs reduce the cost of receiving medical care, such as co-payments, deductibles, and coinsurance. Note that these subsidies are not available if employees choose an employer-provided health insurance plan.

Shop Around

Health care consumers also often fail to compare plans. It’s important to look at what your employer is offering, what the Marketplace (Obamacare) plans are offering, and what private insurance is offering. Americans could save millions of dollars every simply by finding the right plan.

Health savings accounts (HSAs) can also provide consumers with significant benefits. These are high-deductible plans with tax-advantaged savings accounts. This allows people to better prepare for costly medical issues down the line. 

While premiums continuing to rise, the Affordable Care Act (commonly known as Obamacare) has provided people with ten essential benefits. These are items that every insurer is legally obligated to cover, including maternity care, emergency and ambulatory services, and so-called “pre-existing conditions.” Check out HealthCare.gov to ensure that employees know about these valuable benefits.

Educating employees on their health care options isn’t just good for them. It could save both employers and employees a lot of money.

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