Employers’ costs keep rising. According to the Kaiser Family Foundation/HERT Employer Health Benefits 2004 Annual Survey, the costs for providing employee health insurance increased by an average of 11.2% in 2004, the fourth straight year of double-digit premium increases. For the first time, the average cost of a family PPO plan went above $10,000 a year. Fortunately for employees, employers pick up most of the costs: in 2003, on average, employers picked up 84% of premium costs for single coverage and 73% of the premium for families. Larger companies tend to pay more of the costs: large firms paid on average 76% of family coverage premium costs, compared to smaller companies’ 64%. See what other BuyerZone users paid for Health Insurance.

Generally, traditional employee health insurance tends to be the most expensive kind of health insurance program for individuals, followed by PPOs, POSs, then HMOs. For families, PPOs are the most expensive, with HMOs the cheapest.

Traditional indemnity insurance
According to the Kaiser study, the average annual premium for an individual in a traditional health plan is now $3,820, with employer’s contribution averaging $3,352.

Out-of-pocket costs for traditional employee health insurance can vary depending on how you structure the policy. Employees typically pay deductibles from $200 to $1,000, and co-insurance is usually about 20 percent for the first $2,000 to $10,000.

HMO
HMOs are the lowest cost option for health insurance, with total premiums averaging $3,458 and employer contributions averaging $2,906.

Besides monthly premiums, out-of-pocket health insurance costs for employees include low co-payments for visits to physicians within the network and for prescription drugs. These co-payments generally range from $5 to $25. And visits to physicians outside the network are generally not covered at all.

As with most plans, employees pay up to a deductible each calendar year (typically between $250 and $1,000) as benefits are provided, then around 10 to 20 percent co-insurance of any additional charges.

PPO
PPOs cost employers an average of $3,235 per covered employee, with total premiums averaging $3808. While almost as expensive as traditional health plans, they are much more popular with employees and employers alike because of their greater flexibility.

In terms of patient out-of-pocket costs, PPOs can vary tremendously. Some networks require members to pay only a small deductible with each visit, much like an HMO. Most have deductibles and co-payments similar to HMOs, and most will require members to pay significant co-insurance on out-of-network visits.

POS
Average costs for POS plans are slightly higher than HMOs: total premiums average $3,627 with employer contributions averaging $3,085.

POS plans keep out-of-pocket expenses low with easy co-payments for visits within their networks and for referrals. Employees who choose to go outside the network, however, will pay much more in co-insurance.

Broker fees
Health insurance agents and brokers are paid by the insurer, based on the value of the policies you purchase. If you contract your broker to provide other HR services, such as life insurance or handling COBRA administration, you may have to pay additional fees accordingly.