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Rise in health insurance rates is slowing down

By Maryalene LaPonsie on July 10th, 2013

The price of employer-sponsored health insurance plans continues to rise, but a report says the annual increase in premiums is starting to slow. The 2013 ADP Annual Health Care Benefits Report looked not only at the cost associated with workplace health insurance coverage but also enrollment trends.

Medical insurance costs keep going up

The report, issued by healthcare benefits administration provider ADP, found the price of employer-sponsored health insurance plans went up by 3.1 percent last year. While premiums increased, the percentage was less than half the 7.6 percent jump in cost that occurred from 2010 to 2011. Overall, health insurance rates went up 13.9 percent between 2010 and 2013.

According to ADP, for 2013, the average monthly premium for workplace medical insurance is $832, a figure that includes both employer and employee contributions. However, premium costs do vary from state-to-state.

The report considered premium costs in 21 states where employee populations were the largest. It found New Jersey had the highest monthly rate of $968 while North Carolina premiums were least expensive at $733 a month in 2013.

In addition, the percentage of the premium paid for by employers varied from state to state. At the low end of the spectrum, Colorado employers pay an average of 72 percent of medical insurance premiums while New York employers pick up, on average, 79 percent of the cost.

Younger workers and low cost health insurance

While health insurance rates went up across the board, ADP says workers younger than age 30 faced the steepest increase. This group of workers also saw the largest decrease in their eligibility for workplace health insurance plans. Since 2010, their eligibility for employer-sponsored health insurance coverage has dropped 4.6 percent.

Among those younger workers who are eligible to participate in workplace health insurance plans, only slightly more than half choose to do so. ADP speculates that this low participation percentage may be a result of the Patient Protection and Affordable Care Act.

Under the health reform law, young adults up to age 26 can remain as dependents on a parent's group health insurance. The report notes some young adults may choose a parent's policy as a more affordable health insurance option compared to buying their own coverage through a workplace program.

The ADP report was based upon four years of anonymous data collected from a group of 175 U.S.-based companies that employ at least 1,000 workers each.

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