For the first time, the annual cost of employer-sponsored health insurance for an American family of four has topped the $20,000 mark, roughly equivalent to the cost of a new midsize sedan, according to the actuarial firm Milliman.
The latest Milliman Medical Index, or MMI, finds that the cost of an employer preferred provider plan, or PPO, for the average American family rose 6.9 percent to $20,728 this year. While that year-to-year percentage hike is the lowest in 10 years, the $1,335 increase eclipses last year's record of $1,319.
The MMI analysis includes a breakdown of health care costs in 14 U.S. cities. Among those profiled, the most expensive was Miami at $24,965, followed by New York City ($24,545), Chicago ($23,551) and Boston ($22,419). The least expensive at $18,365 was Phoenix, Ariz., followed by Atlanta ($19,506) and Seattle ($19,734), the only three cities surveyed where average health insurance costs for a family of four remains below $20,000.
Employers and employees typically share the cost of sponsored PPOs. This year, employers picked up slightly less of the tab with an increase of 6.7 percent, while employees picked up slightly more with a 7.2 percent increase. Employers have shifted costs onto employees in every year but one between 2007 and 2012, according to the MMI.
This year, employers contributed $12,144, or 58 percent, to each PPO policy on average while employees contributed $5,114 via payroll deduction and $3,470 in out-of-pocket expenses for a total of $8,584, or 42 percent of their policy cost.
How will the outcome of the Supreme Court review of the Affordable Care Act affect employer-sponsored health plans?
If health care reform is upheld, the MMI says some employers may implement larger-than-average increases in out-of-pocket cost-sharing or payroll contributions to offset the added cost to comply with the act. This may lead some employees to seek more affordable health insurance through new state-run exchanges, scheduled to open in 2014.
If the court strikes down the entire act however, the MMI says those under employer-sponsored plans would notice little change. Some employers, however, may roll back benefits offered under health care reform, such as coverage under a parental policy for young adults to age 26.
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