If you’ve managed to hold onto your job and your work-based health insurance during the pandemic, congratulations — and hang in there as you deal with rapidly rising costs for your health coverage.
Premiums for employer-based family insurance plans are going up at four times the rate of inflation, and are contributing to big increases in workers’ out-of-pocket costs, according to a new survey.
Employee health care expenses also have been growing faster than paychecks, the research shows. You'll need to beef up your savings and take other defensive action to keep your family budget off the critical list.
Company health plans cost 4% more this year
The average annual premium for employer-based family coverage was $21,342 from January to July of 2020, up 4% from a year earlier, reports the Kaiser Family Foundation, a nonprofit group that tracks health care.
By comparison, consumer prices squeaked up just 1% during the 12 months that ended in July, the government says.
Since 2010, average family premiums have increased 55%, at least twice as fast as wages (27%) and inflation (19%), Kaiser says
On average, workers this year are contributing $5,588 toward the cost of their family coverage, with employers paying the rest. Employees also have been facing steeper deductibles that in 2020 are averaging $1,644 for an individual — way up from an average $917 in 2010.
About 157 million Americans are insured through an employer, and job-based coverage remains the most common source of health insurance in the U.S., according to Kaiser data.
COVID-19 raises questions
Kaiser conducted much of its survey as the pandemic was getting underway, meaning it isn’t yet clear how employers are responding.
“Our survey shows the burden of health costs on workers remains high, though not getting dramatically worse,” says Kaiser Family Foundation President and CEO Drew Altman. "Things may look different moving forward as employers grapple with the economic and health upheaval sparked by the pandemic."
Economic disruption from COVID-19 could force employers to rethink the health benefits they offer, particularly in a labor market overflowing with job seekers.
Even before the pandemic forced millions more to lose their jobs — and along with it, their employee health benefits — the majority of Americans worried about being able to access affordable health care, according to a 2019 Gallup poll.
How to cover spiraling health care costs
What do you do as your health care expenses climb higher and higher? We’ve gathered six tips to help you confront the surging costs — and lower your blood pressure in the process.
1. Build up your emergency fund. Your rainy day fund is different from your regular savings account — it should be bookmarked for real emergencies, like a whopping medical bill you never expected. Cut expenses where you can, and keep track of spending. Then, stash that cash in a high-yield savings account to help it grow.
2. Get expert advice. Professional financial planners will be able to customize a plan that fits your needs. A certified financial planner can help you find the best way to stretch your budget as you face soaring health care contributions and out-of-pocket costs.
3. Deduct your medical expenses. When you have any major medical expenses, they can be worth savings off your tax bill. Qualified medical or dental expenses that top 7.5% of your adjusted gross income may be deductible, if you itemize. Good tax software can help with that.
4. Develop a side hustle. The best way to put aside more money for health care costs is to increase your income. Build your own side gig and potentially add thousands to your bank account.
5. Find a better job. Specifically, you may want to focus on finding an employer that offers better health benefits. Finding new work isn’t easy during the best of times; it’ll be particularly tough following prolonged spring lockdowns that battered the job market. But don’t get discouraged. Upload your resume to a popular job board, and your next gig could be a few clicks away.
6. If you lose your job, look into private health insurance. If you’re one of millions thrown out of work by the pandemic, you may be able to stay on your existing employer health plan for up to 18 months, if you can afford the high COBRA premiums. Then, check whether you’re eligible for Medicaid, or if you can sign up for a subsidized policy under the Affordable Care Act through your state’s health insurance marketplace. And, free services are available online so you can quickly compare quotes and coverage from multiple insurers.