Health insurance costs are projected to rise significantly in 2024, with many individuals facing increases in premiums and out-of-pocket expenses. According to a recent survey by Mercer, employers expect an average increase of nearly 9% in health care costs, marking the steepest rise in over a decade. Some employers anticipate even larger double-digit increases, despite efforts to mitigate expenses.
Several factors contribute to this surge in costs. Increased labor expenses for health care professionals, rising fees from doctors and hospitals, and a growing demand for services and expensive new treatments, such as weight loss medications, are key drivers. As a result, employees may find themselves sharing the financial burden through higher premiums and additional costs.
Impact on Employees Varies by Employer Size
The extent to which employers will pass on these increased costs to employees remains uncertain. Cynthia Cox, a health insurance expert at KFF, noted that larger employers might have more capacity to absorb some of the costs, while smaller firms could have less flexibility. “It’s not clear how much of that cost they will pass along to employees, rather than eat it,” she stated.
As open enrollment approaches, typically occurring in the fall for a few weeks, employees are encouraged to carefully evaluate their health plans. Louise Norris, a health policy analyst at Healthinsurance.org, emphasized the importance of this process. “Inertia is a powerful force, but it’s always a good idea to evaluate your coverage during open enrollment,” she remarked.
Individuals should verify that their preferred doctors and pharmacies remain within their plan’s network and ensure that necessary medications are still covered. “Don’t assume anything will stay the same,” Norris advised.
Selecting the Right Plan
Employers may offer plans with lower monthly premiums, which could require higher costs when care is needed. Such plans often come with higher deductibles—the amount an individual pays out of pocket before insurance kicks in—or increased copayments at doctor’s visits.
High-deductible plans may also include employer contributions to a Health Savings Account (HSA), which can amount to approximately $1,000. This account can help cover out-of-pocket expenses, and if not used immediately, the funds can be invested and carried over if the employee changes jobs. However, experts caution that choosing a high-deductible plan requires careful consideration of a family’s health needs.
For family coverage to qualify for an HSA in 2026, the minimum annual deductible will be $3,400. This means that families must cover the full cost of care, aside from preventive services, until they reach that limit. Cox warned, “If you pick a high-deductible plan, make sure you have enough savings in the bank.”
Norris also suggested calculating potential costs in worst-case scenarios, such as lengthy hospital stays or serious health diagnoses, which could result in significant bills. Many plans cover only 80% of costs after the deductible is met, with full coverage kicking in only after reaching the plan’s out-of-pocket maximum.
As the open enrollment period approaches, employees should take the time to review their options. With health care costs on the rise, informed decision-making becomes crucial for individuals and families navigating their health insurance choices in 2024.