Employer surveys and industry analysts indicate that the cost of health insurance premiums in the upcoming 2021-2022 cycle is expected to outpace last year’s increase.  These costs stand as one of the largest expense items in any business’s budget, and certainly the fastest growing, continually straining vital businesses. What is more, the COVID-19 pandemic has created even greater uncertainty surrounding these costs. So exactly how is the pandemic affecting health care costs in the US? [caption id="attachment_210155" align="alignright" width="262"] Roger Kirtley[/caption] Many companies saw moderate rate relief in 2020 and the beginning of 2021, while others received “payment holidays” from their carrier.  Although welcome, do not expect this trend to continue.  For 2019 and 2020, annual medical trend at the largest carriers averaged 8%-11%, and many anticipate the rate trend to increase to 11%-15% in late 2021 and into 2022. Delaying or avoiding doctors’ visits and medical procedures due to the pandemic will likely result in higher utilization in the second half of 2021 and beyond. Fear of contracting COVID-19 has caused Americans to forgo or defer medical care, and this has manifested itself in reduced healthcare claims overall according to health insurance industry experts. In fact, in 2020 we saw reduced national health care expenditures for the first time in decades; however, this trend is expected to be temporary because of these deferred care returns in 2021 and beyond according to healthcare consultants Willis Towers Watson. Controlling health care cost remains a top priority for businesses and many strategies can combat rising employee benefits costs.  During these challenging economic times, many employers are reluctant to shift cost increases on to their employees.  Implementing a qualified high deductible health plan remains one of many sound strategies for controlling costs. In addition, when employers allow employees to take advantage of a health savings account or health reimbursement arrangement, employee satisfaction increases significantly. At The Safegard Group, many of our self-funded clients have experienced reduced claim expenditures between 5% and 15% in the past 12 months but we do not expect that trend to continue going forward.  We are advising our clients to budget for an additional 2% to 5% above their annual trend going forward.  However, we expect this to be temporary as Americans return to normalcy. As a local employee benefits consultant, working with local businesses and nonprofits to help manage and control their health insurance costs remains our top priority. Although challenging, and at times frustrating, we take pride in helping them to continue offering a robust employee benefits package to their employees while being mindful of the impact on their budget. A comprehensive benefits package remains a leading tool in attracting and retaining top talent, so it is imperative to control costs and understand the impact of external forces on their benefits program.

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Roger Kirtley is a Vice President at The Safegard Group and is the Practice Leader for their Employee Benefits Division.  He has been in the insurance industry for over 17 years, focusing primarily on employee benefits and commercial insurance brokerage. Roger has extensive experience volunteering for nonprofits in Delaware currently serving as a member on the board of directors for Easter Seals of Delaware & Maryland’s Eastern Shore and The Grand Opera House and is a member of the Resource Development Committee of the Boys & Girls Club of Delaware. He is a native of Wilmington, Delaware, where he continues to live with Alexandra, his wife of 20 years, and their children Caroline and Henry.