Despite a great deal of recent discussion about increasing health care costs for individuals, one study finds employee contributions to their health care plans are actually dropping. This could be welcome news for benefit advisers’ employer clients. However, employer cost and employee contributions vary widely based on an employer’s industry, new research from United Benefit Advisors finds.

A health plan’s average total cost per employee in 2014 was $9,504, of which the average employer cost was $6,276 and average employee contribution, $3,228, according to UBA’s 2014 Health Plan Survey of nearly 10,000 employers. That’s down from 2012 when the average employee contribution was $3,776.

Employee savings are even greater in the government sector, where health insurance plans have the highest average cost per employee at $11,329 (17.5% higher than average) and the lowest employee contribution of $2,040, which is 45% less than the average employee. What’s more, the already low contribution is 39.7% lower than two years ago when public employees contributed $3,051, the UBA data finds.

“The government sector historically has provided generous employee benefits,” says Les McPhearson, CEO of UBA.

While those benefits have typically been welcome by government employees, “the risk that taxpayers face is the forthcoming ‘Cadillac Tax’ if public employers can't get their health care costs under the $10,200 premium threshold,” says McPhearson. “The Cadillac Tax is hefty — a non-deductible 40% excise tax on the excess benefit — which would increase the average cost per employee.”

See related story: Cadillac tax, wellness program clarity top employer priorities

Industry differences

UBA’s survey also reveals striking differences among employer-sponsored health plans across various industries, looking specifically at employer cost versus employee contribution. 

Employer cost per employee for the manufacturing, health care, construction, retail and hospitality services sectors are all 4% to 8% lower than the overall industry average costs, making employees in these industries the least expensive to cover, says UBA.

Employees in the construction industry are one of the least expensive for employers to cover at $5,373 per employee, but contribute the most toward their health benefits paying $3,620.

“The construction industry tends to be made up of young, single males who value higher hourly wages over health benefits,” says Josh Budke, an employee benefit adviser with TrueNorth Companies, LLC. “Even ‘free’ benefits with no copays, like wellness exams and physicals, don’t get utilized in this industry as much as in others, which leads to a lower cost and higher benefit contribution.”

Trends to watch

UBA’s survey also revealed several trends and developments that “bear scrutiny and the ongoing attention of employers interested in making the most informed health care plan decisions possible,” an executive summary of the survey says.

For example, one trend identified for 2014 included employers overwhelmingly opting for early renewals of their plans — a delay tactic that helped them avoid costly ACA-compliant plans and manage costs.

Employers typically continue to offer one preferred provider organization health plan option to employees, while also still widely offering family coverage. In addition, wellness program adoption seems to be in a holding pattern, as pending litigation and regulatory changes swirl on these offerings.

Among employers providing wellness programs, health risk assessments and incentives are increasingly common offerings.

See related story: Wellness programs face muddy regulatory waters

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