Why Your Health Insurance Premiums Could Soar in 2023 – Money Talks News | CarTailz

Health insurance premiums for America’s workers are poised for a big jump in 2023, after largely plateauing that year.

For families who buy health insurance through their employer, annual premium costs this year averaged $6,106, or about a 2% increase from $5,969 in 2021, according to a new study by the nonprofit Kaiser Family Foundation (KFF). For singles, out-of-pocket premium spending increased from $1,299 in 2021 to $1,327 this year, another increase of about 2%.

The out-of-pocket cost is only a fraction of the total premium cost. Employers typically cover most of it, and employees cover the rest. The total cost of bonuses — including both stocks — rose just 1% last year to an average of $22,463, according to the KFF survey, which includes nearly 2,200 non-state public and private employers were surveyed.

All in all, these increases are historically low and appear tiny compared to the headline inflation rate for the 12-month period ended September of 8.2%. Unfortunately, workers can soon expect much larger increases in health insurance rates.

“This could be the calm before the storm,” KFF President and CEO Drew Altman said in a press release from the study, “as recent inflation suggests larger increases are imminent.”

health insurance costs and inflation

This year’s modest premium increases are unusual because they lag both headline inflation and workers’ wage growth, says KFF. In the years leading up to the pandemic, annual increases in health insurance premiums typically far outpaced these factors. In 2019, for example, family premiums increased by 5%, while wages increased by 3.5% and annual inflation was 1.6%.

Why did 2022 buck this trend? “This year’s employer costs were largely set in the past year, before inflation became a major economic concern and after the COVID-19 pandemic led to a temporary slowdown in healthcare utilization,” the report said.

However, as soon as insurance contracts are finalized for 2023, these price increases are likely to kick in, according to KFF. The premium increases could affect the nearly 160 million Americans who rely on health insurance through their jobs. KFF hasn’t exactly estimated how big the premium increases could be, but a bigger-than-average increase could be on the horizon.

“As inflation continues to grow at relatively high levels, we could potentially see a higher increase in average premiums in 2023 than in recent years,” the report said.

Workers in smaller companies pay more for health insurance

KFF’s findings also show that workers in small businesses — those with fewer than 200 employees — pay much more for their health insurance.

“The report shows persistent differences in the burden of health care costs on employees between small and large employers,” explains KFF.

On average, workers in small firms pay much more out of pocket for their bonuses. For family insurance, small business workers pay about $7,600 annually, while larger business workers pay about $5,600 — a difference of about $2,000. Workers in smaller companies also typically have health plans with disproportionately higher deductibles, meaning they have to pay more upfront and out of pocket before certain benefits take effect.

Similarly, bonuses for workers in small companies are growing much faster than those for workers in large companies. KFF’s report shows that since 2017, average family bonuses have increased 26% for small businesses, compared to 17% for large businesses.

As premiums rise in the coming year, KFF’s findings suggest all workers are likely to pay more for their health insurance. However, the small business owners, who are already paying more, are likely to be particularly heavily burdened.

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