Health Insurance Cost Trend Unabated

Aug. 3–For the fourth consecutive year, New Jersey businesses face double-digit increases in health insurance costs, and employees will be paying more for their coverage again this year, according to an annual survey.

The New Jersey Chamber of Commerce survey of 130 New Jersey employers found that 74 percent of the responding companies saw health insurance costs rise by as much as 13 percent.

As a result, 50 percent of New Jersey companies surveyed increased their employees’ health insurance premiums.

That’s a percentage higher than 26 other states surveyed, including Ohio, Pennsylvania and New York.

In fact, the national percent of growth in health care premiums has decreased to an average of 12.4 percent in 2005 from 14.6 percent in 2004.

By contrast, New Jersey costs rose to 13.3 percent this year, up from 12.7 percent in 2004.

This is due, in part, to state mandates that regulate the premiums, according to the chamber.

Businesses are again faced with a difficult choice, said Joan Verplanck, president of the New Jersey chamber, of “absorbing the cost increases or utilizing cost-sharing practices with employees.”

To cope with the rising costs, the survey found that one third of the employers increased deductible levels and one in six increased the employee co-insurance level.

The typical employer in 2004 spent about $6,600 per family on health insurance premiums for the year. An employee paid an average of $2,400 for health coverage.

Some employers offer Health Savings Accounts (HSA) and Health Reimbursement Accounts (HRA) to assist employees with inflated premiums.

Half of the companies surveyed that offer HSA contribute $500 or less per employee, while the other half contribute between $500 and $999.

Those that offer HRAs contribute a heftier sum. Thirty-three percent of these companies contribute $500 to $999, and 66 percent contribute more than $2,000.

Of the companies offering HSAs, New Jersey is by far the lowest out of 27 other states with only 3.8 percent. Companies offering HRAs are more common at 9.7 percent.

The chamber’s annual survey was conducted by Compdata Surveys. Data were collected from more than 4,300 national businesses.

—–

To see more of The Record, or to subscribe to the newspaper, go to http://www.NorthJersey.com.

Copyright (c) 2005, The Record, Hackensack, N.J.

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.