Weight-loss drugs. Cutting-edge gene therapies. In vitro fertilization. All are life-changing, but expensive, medical options that are helping to drive up health care costs next year for employers and their employees.
The annual open enrollment period for health benefits is now underway at many workplaces. According to surveys by industry groups and benefit consulting firms, employers expect the costs of those benefits to jump as much as 9 percent on average in 2025, after years of more modest increases. But workers probably won’t be asked to shoulder them all. In recent years, employers have assumed much of the cost increases, probably because of a tight job market, said KFF, a nonprofit health research group. And employers may take steps to rein in their costs.
KFF found that while employers have seen the total annual cost of premiums for family coverage rise 24 percent over the past five years, the amount that workers pay rose 5 percent, or less than $300 on average. Workers contribute about a quarter of the average $25,572 annual family premium, or about $6,300.
About 154 million Americans rely on their employers for health insurance, according to KFF.
Aon, a business services firm, found that while employers’ health plan costs rose 6.4 percent from 2023 to 2024, employees paid 3.4 percent more in premiums. “We expect something similar will happen into 2025 as well,” said Debbie Ashford, the North America chief actuary for health solutions at Aon.
Still such increases can be significant for some workers, especially as families have dealt with higher prices for groceries, cars, and home and auto insurance.
“Affordability is a very big concern,” said Jim Winkler, the chief strategy officer at the Business Group on Health, an advocacy group for large employers. “So employers have kept a lid on it over the past few years.
The business group said its annual survey of large employers had found that they expected costs to rise about 8 percent, the highest jump in more than a decade. But employers also indicated that they were prepared to continue absorbing much of the increase — at least for 2025, Mr. Winkler said. (The group surveyed 125 large employers with a total of more than 17 million employees.)
In a separate survey that included smaller companies by WTW, a benefits consultant, about a third of employers said they would shift costs to workers through higher premium contributions. More than half said they would look for other ways to rein in costs, like networks that steer employees to lower-cost providers or by changing pharmacy benefits. (The survey included 417 employers of varying sizes with a total of six million employees.)
And employees are likely to see other changes as employers manage costs. The rising expense of prescription drugs, for instance, means employers may seek to negotiate with new vendors, Mr. Winkler said, introducing new pharmacy providers.
The benefits consultant Mercer found that about half of employers expected to make cost-cutting changes to their health insurance plans in 2025, an increase from 44 percent this year. Changes might include raising deductibles, the amount employees must pay out of pocket for care before insurance pays. (Mercer surveyed more than 1,800 employers with at least 50 employees.)
That’s a concern because deductibles are already high. Among workers who have a deductible, the average this year was $1,787 for individual coverage, about the same as last year, KFF found. Workers at small firms (those with under 200 workers) face higher deductibles, $2,575 on average.
Factors contributing to higher health care costs include demand for pricey prescription medications, including so-called GLP-1 obesity drugs (Wegovy and others), so employers are deciding whether to offer them.
More than a quarter of the largest employers (those with at least 5,000 workers) cover GLP-1 drugs for weight loss, KFF found. But many impose conditions, like meeting with a dietitian or trying a traditional weight-loss program first, to help manage the cost. KFF previously found that almost 50 million adults in employer plans met clinical criteria for the drugs, which can cost thousands of dollars a year per person.
Almost half of large firms said covering the drugs would be “important” or “very important” to employee satisfaction, KFF found.
“It depends how much pressure they feel from employees,” said Matthew Rae, associate director of KFF’s program on the health care marketplace.
Coverage of costly treatments for infertility, like in vitro fertilization, has also become more widespread, KFF found, with about a quarter of large employers saying they offer them.
Also driving up costs is a tight supply of health care workers as an aging population seeks more care, as well as mergers of health care systems, which create larger systems with more negotiating power, Mercer found.
Some employers expect to take steps like requiring preapproval for certain treatments, and conducting audits to check on eligibility of employee dependents, according to the International Foundation of Employee Benefit Plans.
Other employers are offering a variety of health plan designs to make care more affordable. Centivo, a health coverage start-up, offers employer plans with no deductibles and free primary care in limited provider networks that it deems both high quality and “cost effective.” There are co-payments for visits to specialists. Centivo’s chief executive, Ashok Subramanian, said high deductibles might cause people to avoid care, potentially creating worse problems and bigger bills down the road.
JPMorgan Chase is offering a Centivo plan starting in January as an option for its Dallas-area employees. (JPMorgan’s health unit is an investor in Centivo.) The bank just concluded its open enrollment period and was encouraged by the number of sign-ups for the plan, which is attractive because of its emphasis on primary care, said Dotan Ziv, JPMorgan’s head of U.S. benefits design and strategy.
Here are some questions and answers about annual open enrollment:
How should I choose a health plan?
Regina Ihrke, the health, equity and well-being leader for North America for the benefits consultant WTW, suggested considering your health costs for this year and what you expected them to be in the coming year. Do you want to pay a higher but more predictable monthly premium or a lower premium for a plan with a higher deductible? Many people “over-insure,” she said, because “they get scared by the deductible.” If you think you can manage a higher deductible, such a plan may save you money, especially if it offers a health savings account, which can help you set aside money to cover unexpected expenses and reduce your taxable income. Give yourself time to compare plans and ask questions, Ms. Ihrke said, adding, “It’s a good year to not wait until the last minute.”
How much can I contribute to a health savings account for 2025?
You can contribute up to $4,300 to an H.S.A. for single coverage and $8,550 for family coverage. People 55 and older can contribute an extra $1,000. To qualify for an H.S.A., your health plan must meet certain criteria, including a deductible of at least $1,650 for single coverage and $3,300 for family coverage.
The maximum contribution for flexible health spending accounts, or F.S.A.s, in 2025 is $3,300. Like H.S.A.s, F.S.A.s let employees set aside pretax money for health costs, but their rules are different, including that you can’t take the account with you if you change jobs.
What if I don’t have job-based health insurance?
Open enrollment for health plans offered through HealthCare.gov starts Nov. 1 and runs through Jan. 15, but you’ll need to enroll by Dec. 15 to have coverage start on Jan. 1. (Dates may vary for the 19 states and the District of Columbia that run their own Affordable Care Act exchanges.) More than 21 million people are covered by so-called Obamacare plans.
Premiums for a benchmark “silver” plan in the Affordable Care Act are expected to rise 4 percent on average, according to KFF. But most enrollees qualify for tax credits that drastically lower premiums. Federal legislation temporarily enhanced the subsidies in recent years. If Congress does not extend them, they will end after 2025.
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