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A meteoric rise in worker health costs has slowed

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Costs for some key health insurance components have slowed for workers in recent years. While the deceleration is a positive trend, many workers likely still find current prices unaffordable, experts said.

“Yes, it’s slowed,” said Carolyn McClanahan, a physician and certified financial planner, and founder of Life Planning Partners in Jacksonville, Florida. “But it’s already egregious for the average person.”

Employer-sponsored health plans have many moving parts that can affect workers’ wallets. For example, workers get premiums deducted from each paycheck. Visiting the doctor generally comes with cost-sharing, like co-payments, deductibles and out-of-pocket maximums.

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The rise in worker premiums has somewhat mitigated.

Workers pay $1,401 in total premiums in 2023, up 18% from 2018, according to KFF, a nonprofit health-care data provider. They increased by an equivalent amount from 2013 to 2018, but had swelled by 39% from 2008 to 2013.

The dynamic is more pronounced for deductibles and out-of-pocket maximums.

A deductible is the annual sum a consumer must pay out of pocket before a health insurer starts to pay for services.

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Single workers have a $1,735 average deductible in 2023, according to KFF. (This cost is for employer-sponsored health plans and assumes consumers receive in-network care.)

The average deductible has grown by 10.3% in the past five years, up from $1,573 in 2018. However, that rate has slowed significantly relative to the recent past: Deductibles rose by 38.6% from 2013 to 2018, and by 54.4% from 2008 to 2013, for example, according to KFF data.

Prior to 2018, deductibles “were taking off,” said Matthew Rae, associate director of KFF’s health-care marketplace program and co-author of its annual health benefits survey.  

How out-of-pocket maximums have changed

The dynamic is similar for out-of-pocket maximums, the annual limit on a worker’s cost-sharing for the year. After hitting this limit, insurers can’t ask for more co-pays, co-insurance or deductibles, for example.

The out-of-pocket maximum is “what really matters for people who spend a lot” on health care, Rae said.

In 2023, 13% of single workers have an out-of-pocket maximum of less than $2,000, while 21% of these workers have one above $6,000, KFF said. That’s hardly changed in the past five years.

It’s already egregious for the average person.

Carolyn McClanahan

founder of Life Planning Partners

However, the dynamic changed a lot during the prior five-year period. In 2013, 29% of workers had an out-of-pocket maximum below $2,000, while only 4% had one of $6,000 or more, according to KFF. In other words, the share of people with a relatively low limit was halved from 2013 to 2018, and the share with a high limit jumped fivefold.

After years of both the maximum and deductibles increasing rapidly, “that’s not the story anymore,” Rae said.

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How to keep costs down

Choosing the most cost-effective health plan for you generally comes down to picking “only the plan you need,” McClanahan said.

In other words, a plan with comprehensive coverage but high monthly premiums may not be the best choice for someone who doesn’t get frequent medical care.

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For example, an HMO plan will generally be best for consumers who don’t have significant health problems and rarely go to the doctor, she said. Find a good primary care doctor and ask what network the doctor is on for HMOs so you can get the doctor you want, she recommended.

Of course, most employees only get a few choices during open-enrollment season, so there’s not much they can do on an individual level, McClanahan said. At the family level, however, there may be other variables: If both spouses work, the most efficient option may be electing one plan for the whole family, or putting a spouse and kids on one plan and the remaining spouse on the other, she said.

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