Cost Impacts Health Plan Enrollment – No Surprises There


Recently released consumer data shows that people who make less are also less likely to enroll in employer-sponsored health plans. No surprises there. Anyone who would be surprised by such a thing clearly doesn’t understand how expensive health plans are compared to annual salaries. A lot of people simply do not make enough money to purchase health insurance.

The 2023 Benefits and Enrollment Trends report from Alight shows that consumers earning less than $40K annually have the lowest health benefits enrollment rate at roughly 56%. In addition, enrollment among people earning $60K or less has steadily declined for the last several years.

This, despite the fact that the same study reveals most employers offer multiple options. Those options include standard group health insurance, high deductible health plans, and even health savings accounts (HSAs).

Prices Are Too High

The statistics may be startling to some people who do not struggle to make ends meet. But in the real world, affordability is an issue for most major purchases. Young people are struggling to buy homes because prices are too high. Families are forgoing vacations because travel costs have spiked. Why would it be any different for health benefits?

It is no secret that health insurance premiums have consistently increased beyond the rate of inflation for years. The average employee cost of a single Silver health insurance plan in 2023 is $6468 annually, or $539 monthly. The average policy comes with an annual deductible in excess of $6,000.

Add premiums and deductibles together and the average Silver plan costs a single worker more than $12,000 per year. Imagine what it costs for a family plan? Someone earning only $40,000 per year would spend more than 25% of their paycheck on health insurance.

Getting Blood from a Stone

Expecting people who make less than six figures to be able to afford health insurance doesn’t make sense. Expecting those making less than $40K to have insurance is like expecting to get blood from a stone. It isn’t going to happen. Even with government subsidies and federal exchanges, health insurance is out of reach for millions of people.

To be sure, insurance companies deserve some of the blame here. But they are the only ones. The entire healthcare system is terribly overpriced thanks to a combination of greed, complexity, and inefficiency. Even the federal government has a hand in things. Government interference only drives prices up by artificially manipulating markets.

Employees Need Low-Cost Alternatives

Insurance companies, the healthcare industry, and government getting their collective act together would solve the problem of escalating healthcare costs. But since that is never going to happen, employees need access to low-cost alternatives. Such alternatives are out there. The key is getting employers on board.

Las Vegas-based StarMed offers a low-cost alternative in self-funded medical plans. StarMed acts as a third-party administrator of the self-funded plans their clients offer employees. Employees get health plans that include minimal essential coverage at a fraction of the cost of traditional health insurance.

Employers can also offer health reimbursement arrangements (HRAs), health stipends, and other options. Why more don’t is a mystery. Maybe it’s ignorance. Perhaps it is a belief that low-cost alternatives are inadequate. It’s really anyone’s guess.

No one should be surprised that cost plays a role in whether people have health insurance. A significant portion of the U.S. population cannot afford to buy health insurance. It is not rocket science. If you are earning just enough money to cover the basics, you’re not going to throw down $500 or more to cover monthly health insurance premiums.

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