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Employers Take a Paternalistic Approach to Health Plan Premiums in 2021

Prior to COVID-19, employers applied creative cost-sharing techniques across their health plan offerings to maintain affordability and stability for both their organizations and their employees. Some predicted that COVID-19 would usher in sharp increases in health care premiums, which would put employers in a tough spot in terms of cost-sharing in 2021. However, growth was moderate at best for most health plan types according to our State of Employee Benefits 2021 report.

In fact, according to the 2020 AFLAC Workplace Benefits Trends report, employers were intent on supporting financial security, stability and focus on wellness for their employees. The report found that employers still put high value on their benefits programs and employee health and wellness. Despite the challenges of COVID-19 in 2020, most employers intentionally kept their benefits offerings and strategies stable with little change.

Employers are responding directly to the specific concerns of their employees. MetLife reported that 56 percent of employees said that financial health was their primary concern during COVID-19, narrowly beating mental and social health (both at 54 percent) and physical health (at 53 percent).1

So, what does that employer cost-sharing strategy look like in the actual open enrollment data?

Most employees have seen slight increases in their health plan premiums each year over the last four years. Except for individual high deductible health plan (HDHP) subscribers, who saw a four percent decline in premiums, all health plan participants saw a minimum of a four percent increase.

However, employee premium contribution as a percentage of the total premium decreased slightly in 2021 as employers took on more of the cost burden.

Average Annual Employee and Employer Premium Contribution, by Plan Type and Coverage Level, 2018-2021

Voluntary benefits: The other part of the equation

Even though employers absorbed more of the premium cost for employees in 2021, especially for HDHP plans, health care costs are still on the rise and COVID-19 left many feeling financially insecure. Prudential reports that over 70 percent of employees believe that employer-sponsored benefits are a key part of compensation and the employees should be able to rely on their employer for help to take care of their financial, physical and mental needs. Additionally, 42 percent of employees said that they have benefits through their employers that specifically reduce their financial stress. Of those, 37 percent of employees are likely to select voluntary accident insurance and 32 percent would select hospital indemnity coverage.2

By expanding voluntary benefit offerings, employers can provide employees with a financial safety net that helps protect them against unexpected costs and mitigate related fears. Employer voluntary benefits offerings for income protection benefits have all increased since 2018. In fact, at least 50 percent of large employers are offering voluntary accident, critical illness and/or hospital indemnity benefits.3

Average Annual Employer Offering Income Protection Benefits, 2018-2021

Employee participation increased in these income protection products across the board, with hospital indemnity participation doubling since 2018. In fact, the participation rates are nearly the same for both HDHP and PPO subscribers, which indicates employees are finding value in these products, regardless of the level of the medical coverage they select.

Average Annual Participation in Income Protection Benefits, 2018-2021

It’s always a challenge to design benefit strategies that balance the needs of an organization and the specific needs of employees, even more so during and following COVID-19. As the impact of the pandemic comes into focus and employees’ needs evolve, investing in a benefits management platform with data analytics capabilities can give employers a deep level of insight to design smarter health plans while controlling costs.

Read more about employer and employee benefits over the last four years in our 2021 Benefitfocus State of Employee Benefits report.

Take a quick look here with our infographic!



Large Employers are defined as employer groups with 1,000+ employees


About the Author

Matt is a Content Marketing Manager at Benefitfocus. He came to Benefitfocus with 10 years of clinical experience, in both Primary and Specialty Care, and developed a unique specialty at the crossroads of data based health analytics and individual provider and member health and wellness initiatives as an Health Insights Customer Success Manager. Matt joined the Content Marketing team in 2020 where his focus is to use his experience to develop insightful and impactful resources for health benefits leaders to help them navigate an evolving and increasingly complex landscape. Matt holds a Bachelor's degree in English from The Ohio State University and a Master's degree in English from The Citadel Graduate College.

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