From the October 2010 issue of Benefits Selling Magazine •Subscribe!

Health care costs surge for everyone

Experts at Aon Consulting say more people are making monthly contributions to COBRA. And with unemployment continuing to hover around 10 percent, the frequency and duration of the program's use is driving up premiums.

According to the consulting company's survey of employers, the average monthly cost for employee-only HMO coverage for a terminated worker is $429 this year, compared to $399 for the same coverage in 2009.

For employee plus family, the former employee is paying $1,251 a month this year, compared to $1,171 per month last year.

As for PPO coverage, the average monthly cost for employee only is $449 in 2010, compared to $439 in 2009, and for employee plus family, the cost tops out at a monthly average of $1,310 this year, versus $1,275 last year.

"Those who are unemployed, and facing uncertainty about employment prospects and future COBRA availability, are utilizing the program more than we've traditionally seen to treat a variety of conditions prior to potentially losing coverage," says John Zern, executive vice president and Health & Benefits Practice director with Aon Consulting. "This coupled with the high unemployment rate, is placing the COBRA program in a unique and unprecedented position."

Those employed can also expect to foot more of the bill for health coverage in 2011. Sixty-five percent of employers plan to increase cost sharing next year for things such as deductibles, co-pays and out-of-pocket maximums. What's more, 57 percent of companies will ask employees to contribute more for the overall cost of health care in 2011.

"We believe the new health reform law will increase health care costs by 2 percent to 4 percent during the next three years," said Tom Lerche, senior vice president with Aon Consulting. "In addition, we expect to see new costs related to excise taxes and potential cost shifting from reductions in Medicare reimbursement to providers, which will be on top of existing long-term medical trend inflation. These factors will lead many employers to consider increased employee contributions for health coverage, as well as plan design cost sharing."

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