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Brother, can you spare a premium?

By Jay MacDonald ·
Tuesday, September 7, 2010
Posted: 7 am ET
Is high risk health insurance a good idea?

American workers are shouldering a greater share of employer-provided health care costs, according to a new study.

Corporate CEOs may be stingy when it comes to sharing profits, but they're apparently more than happy to share the rising costs of health insurance with their workers.

The annual survey by the Kaiser Family Foundation and the Health Research and Educational Trust finds that workers are shouldering an ever larger share of their health insurance costs as companies tighten their belts to tough out a stubbornly stalled economy.

According to the survey, workers with health insurance now pay an average of 30 percent of the premium for family coverage, up 3 percent from last year, while those with single coverage pony up 19 percent of the premium, up 2 percent from last year. For family coverage, employees paid an average of $3,997, up $482 from last year, while employers chipped in an average of $9,773, down $87.

Employee premiums for employer-sponsored family health coverage rose an average of 13.7 percent this year, while the amount employers contribute for health insurance fell by 0.9 percent.

Employee premium payments have gone up 47 percent since 2005, while overall premiums have risen 27 percent, the study shows.

Kaiser CEO Drew Altman says that while companies still pay 70 percent of the total premium, this year they passed their health insurance premium increases on to their employees rather than absorbing them as they have in the past.

Given the widespread layoffs, pay cuts and persistent double-digit unemployment in many parts of the country, employees have little bargaining power to protest such practices.

But Altman seized the occasion to state the obvious: "The coverage that employees get is looking less and less like the coverage that their parents used to get," he sold the Associated Press.

What's in your wallet (or not)? Have you been forced to shoulder a greater share of your health insurance premium in the past year?

And the question your boss may not have asked: How do you feel about it?

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Jay MacDonald
September 08, 2010 at 8:34 pm

Thanks for the unsolicited testimonial on one of my favorite high-deductable health plans, Shantique. I've had one since the old days when they were called Medical Savings Accounts or MSAs and it has been most cost effective for my family. One warning on HSAs however: the premiums tend to go up regularly and sometimes dramatically based on the dynamics of your HSA group. In 10 years with an HSA, I've never come anywhere close to meeting my deductible, but I was able to build the savings portion within four or five years to where it now more than covers the deductible amount. It's a great option for some of us.

September 08, 2010 at 8:33 am

@ Ryan

If you are going to use one of those High Deductible plans, definately put some research in an HSA account (lots of banks offer them, just look out for high fees). You can take that savings your getting from staying away from the employer plan and put it away in a tax free account. For a family its about $5600/year (check IRS for exact amount). You get to deduct it AND the beauty of it is if nothing happens this year, you can roll it to next year and keep saving. Then if you have a bad year, you have the money in an account that you can pull from to pay it (tax free)! These accounts have lots of investment options too, so you can invest over the long term, and possibly be able to self fund your medical needs in retirement.

I'm thinking alot more people (esp. Gen Xers and younger) are going to need to start doing this!!

Jay MacDonald
September 08, 2010 at 7:27 am

Thanks for sharing your experience, Ryan. I sense there is a growing community of like-minded people out there who would rather take control of their outlay for medical services than continue to bleed money for coverage they don't use. As you've probably learned, HDHPs and Medical Savings Accounts at least carry some tax advantages to offset the risk of leaving group coverage. The way some employers are passing on the costs of group plans may ultimately lessen their value to attract and retain top employees. Only then are we likely to start to see a healthier split. Good health to you and your family!

Ryan G
September 07, 2010 at 12:13 pm

I opted out of my employee sponsered health insurance this year. It was way too expensive. I purchased a High Deductible Health Plan (HDHP) for myself, wife and baby daughter. I am paying a fraction of the cost of health insurance than I used to. The plan covers our yearly wellness visits but everything else comes out of pocket until the deductible is hit (I went with a 10,000 deductible!)

Good thing my family and myself are very healthy! :)

If something should happen and we are hit with an extremely high medical bill I will get on a payment plan with the hospital. I would then be able to afford to pay the amount that I am saving every month right now, in otherwords I can arrange it to where my takehome pay is the same as it was before I left my employer sponsored plan. In the meantime I am enjoying the additional income.