The final unsubsidized 2023 insurance premiums are in. Every year, insurance companies are required to submit their proposed rate increases to be reviewed by state experts, according to guidelines set by the Affordable Care Act (ACA).
Rate increases of more than 15% require intense scrutiny and, if passed, insurance companies must provide easy-to-understand information to customers about the logic behind the increases.
This upcoming year will see an average of a 6.2% increase across the country. For comparison, the increase from 2021 to 2022 was 3.5%, and the increase from 2020 to 2021 was only about 1.2%, according to filings with individual state departments of insurance.
From 2019 to 2020, the rates slightly decreased, which means that the 2023 increases will be felt more so than in previous years. The ten largest rate increases for this upcoming year all break into the double digits. Is your state on the list?
What’s more, 11 total states have rate increases above 10%. Idaho and Virginia were the only states to have decreases. You can see the full list here.
Insurance premiums are increasing because of rising medical care costs, prescription drug costs, and increases in healthcare utilization. Plus, this coming year’s rates will be especially high due to record inflation.
Medical inflation generally lags behind actual inflation, which is why we will not see large increases in healthcare costs until the new year. Experts also predict that healthcare inflation will surpass normal inflation in January 2023.
With employee benefits costing, on average, between 10% and 20% of a company’s revenue, a 6% bump will not go unnoticed. And, with no small degree of economic uncertainty looming ahead, many revenue projections have been reserved in general. Additionally, with the war for talent coming to a close, we could begin to see companies cut back on non-essential benefits in their packages. In preparation for the coming year, some companies like Meta, HelloFresh, Redfin, Shopify, Salesforce, and even Amazon have started to lay off employees. Some mass layoffs, at Meta and other tech companies, have amounted to over 10% of the company’s workforce. We will see many businesses turn to the use of part-time and temporary employees to ease some of their benefits costs, as well.
If you are an employer, now is the time to communicate with your broker and find best practices to save money without skipping on what’s important for your employees. Your insurance broker can get better rates for you and act as a guide through economic fluctuations. For tips on what to ask your insurance broker or on negotiating rates, read, "What to Ask a Business Insurance Broker: An Insider's Guide" and “Can I Negotiate Insurance Broker Fees and Commissions?”.
Because brokers’ commissions are tied to the cost of the plan, this is good news for brokers. As the employers’ costs go up, so will the broker’s profit. This is also a good opportunity for brokers to differentiate their services by demonstrating value at a time when saving money is increasingly important to employers.
If you want to know more about broker commissions and fees, check out our free calculator here.
For more exclusive content, check out what’s trending on the Mployer Advisor blog.
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