Many people who receive health insurance benefits through an employee benefit plan do not realize the actual cost of their coverage. Often the amount of the annual premiums can come as a surprise when an individual loses their job and must pay for their own health insurance coverage or plans to retire before age 65 when Medicare kicks in. In addition, too often employees do not take into account the value of health insurance benefits when choosing between multiple job offers or looking to switch employers.
According to the Kaiser Family Foundation the average cost of a family health insurance plan now exceeds $20,000 per year. This is a 5% increase over the previous year as the cost of health insurance premiums continues to outpace the average rate of inflation in the US. On average employers cover 71% of the cost of premiums. However, this percentage can vary greatly from employer to employer making health insurance premiums an important bargaining chip for employees when it comes to negotiating compensation.
In addition, the high cost of health insurance premiums is often the single issue that prevents an individual from being able to retire before age 65. Therefore, the cost of health insurance premiums should be incorporated into any retirement plan.