Employer Sponsored Health Insurance Premiums Grew by 7% in 2023

October 19, 2023 - The average annual premium for employer-sponsored health insurance increased by 7 percent in 2023, a KFF survey revealed.

The 2023 benchmark KFF Employer Health Benefits Survey included interviews with over 2,000 private and non-federal public employers with three or more workers. Researchers conducted the survey between January and July 2023.

The average annual premium for employer-sponsored health plans in 2023 is $8,435 for single coverage and $23,968 for family coverage. Both premiums grew by 7 percent from 2022. Meanwhile, workers’ wages increased by 5.2 percent and inflation rose by 5.8 percent.

The average family premium has increased by 22 percent over the last five years, while workers’ wages and inflation have increased by 27 percent and 21 percent, respectively.

The 7 percent growth in premiums was higher than in 2022, when the average single premium grew by 2 percent and the average family premium increased by 1 percent.

Premiums vary by employer type, the survey found. The average premium for single coverage is higher at small firms ($8,722) compared to large firms ($8,321). But the average family premium was similar at small ($23,621) and large firms ($24,104).

Premiums for those in high-deductible health plans with a savings option are lower than the average single and family premiums. In contrast, premiums for workers enrolled in preferred provider organizations (PPOs) are higher than the averages.

Workers at private for-profit firms pay $8,078 for single coverage, while those at public firms pay $8,771 and those at private not-for-profit firms pay $9,023.

Worker contributions differed between single and family coverage. On average, workers contribute 17 percent of the premium for single coverage and 29 percent for family coverage. The average amount workers contribute is $1,401 for single coverage and $6,575 for family coverage.

Three in ten workers at small firms are enrolled in a plan where the employer pays the entire premium amount for single coverage, compared to 6 percent of workers at large firms. However, 32 percent of workers at small firms contribute more than half of the premium for family coverage compared to 8 percent at large firms.

Almost a quarter (23 percent) of employers say they will increase workers’ contributions in the next two years.

While premiums grew in 2023, annual deductibles generally remained stable. The average annual deductible for single coverage is $1,735. This amount has increased by 10 percent over the last five years and 53 percent over the last ten years, the survey noted.

This modest growth may reflect workers’ affordability concerns. For example, 58 percent of employers said their workers had at least moderate concerns about the affordability of their plan’s cost-sharing requirements.

The survey highlighted potential concerns about provider networks, particularly for specialty care. Nine percent of firms said they offer at least one plan they consider to be a narrow network plan, which reduces costs by limiting the number of providers that can participate.

Most firms (91 percent) said there are enough primary care providers in their plan’s network to provide timely access to care for workers. Fewer firms (67 percent) said there are enough behavioral health providers in their plan to ensure timely access to care. Similarly, just 59 percent of firms said there are a sufficient number of providers treating substance use conditions in their plan’s network.

Nearly 20 percent of large employers said they took steps in the past year to increase the number of mental health providers in their largest plan’s network, but 21 percent noted their plan limits the number of covered mental health services.

Following the overturning of Roe v. Wade, abortion coverage has been spotty. New state laws that prohibit or restrict access to abortion have created challenges for employers with workers in multiple states.

Ten percent of large firms said their largest plan does not cover legal abortions at all, while 18 percent said they only cover legal abortions under certain circumstances. Almost a third of large firms said they cover legal abortions in most or all cases.