Employers across all industries, business sizes and geographies face the challenge of providing affordable health benefits as costs continue to rise.
"Employers can offer markedly different health benefit experiences for workers, affecting access to care, the affordability of coverage and the scope of benefits provided," a new report from Peterson-KFF Health System Tracker said. "As the cost of health insurance increases, employers continue to grapple with what types of benefits their employees want, how much to spend and how to share costs with employees."
Participation in employment-based coverage is tied to affordability. "You have a lot of people who are choosing just not to have coverage because they don't want to pay the premiums," an HR director said in a focus group. "They can't afford it."
Employers have several factors to consider when assessing affordability:
- Can workers afford the contribution for self-only coverage?
- Can they afford the additional contribution to cover family members when it is offered?
- Can they afford the out-of-pocket costs if they or their family members use their coverage? This includes both the cost-sharing for covered benefits and the comprehensiveness of the coverage.
Providing adequate coverage to low-wage employees squeezed by both the pressures of both high costs and limited resources is especially challenging. Employers are using several strategics to improve affordability for these workers, including offering lower-priced, less- generous plan options for workers and reducing contribution amounts, or cost-sharing for workers based on their wage levels.
The first approach helps workers enroll in coverage but may expose them to high out-of-pocket costs if they need significant levels of health care. Subsidizing contributions for lower-wage employees may help them afford more-comprehensive plan options that otherwise might be difficult for them to afford. In focus group discussions, many employers reported offering different plan levels to try to accommodate different portions of their workforce.
"For 2026, we are adding a value plan," the director of total rewards for a large manufacturer said. "We have your standard preferred provider organization traditional plan, we have our health reimbursement arrangement, which is our richest plan, and then the business came to us and said, 'we really need to try to get more into our associates' take-home pay'.
"I came up with this value plan. The concern that we have is we don't want people just choosing the value plan if that is not the best plan for them, so we did our best with the education as far as our open enrollment guide, which is in print right now, and we'll be doing employee meetings."
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