This report outlines the key trends in group health insurance for 2024, highlighting data from the Kaiser Family Foundation’s latest Employer Health Benefits Survey. Brokers and PEOs will need to adapt to the evolving landscape of employer-sponsored health benefits, focusing on cost control, flexibility, and new healthcare solutions.
In 2024, premiums for employer-sponsored health insurance saw significant increases, with the average single coverage premium rising by 6% to $8,951 and family coverage increasing by 7% to $25,572. Although these increases are slightly lower than the 7% premium hike in 2023, they still outpace inflation (3.2%) and wage growth (4.5%), continuing a trend where family premiums have risen 24% over the last five years. This upward pressure is creating financial strain for both employers and employees. Larger firms are generally better equipped to manage these rising costs, while smaller businesses are turning to alternative strategies, such as self-funding and level-funded plans, to control expenses.
While premiums have been steadily rising, deductible growth has stabilized, though it remains a substantial factor for employees, especially at smaller firms. More employers are also stepping up their contributions to help workers manage these higher out-of-pocket costs.
Key points:
From 2023 to 2024, self-funding and level funding remained consistent trends among firms, particularly larger ones, to manage healthcare costs. In 2024, 63% of covered workers were enrolled in self-funded plans, down slightly from 65% in 2023. This includes a decrease in enrollment for large firms (from 83% in 2023 to 79% in 2024) and a slight increase in small firms (from 18% to 20%).
For level-funded plans, which combine a small self-funded component with stop-loss insurance, the adoption rate held steady. In 2024, 36% of covered workers at small firms were enrolled in level-funded plans, a slight increase from 34% in 2023. These arrangements continue to appeal to small firms for their flexibility, as they allow firms to base ratings on health status and avoid mandatory essential benefits required for fully insured plans.
Overall, the slight shifts reflect a stable commitment among employers to use self-funding and level funding as strategies to manage liability while addressing healthcare needs.
In 2024, GLP-1 agonists—often prescribed for weight loss—remain a significant point of discussion due to their high cost and potential for long-term use. Among employers with 1,000 or more employees, only one in four currently cover these medications for weight loss. Of those who do not, 69% indicate they are unlikely to add coverage within the next year. For the employers who do cover GLP-1 drugs, 46% report a significant impact on prescription costs, while only 31% view it as highly important for employee satisfaction.
As more insights emerge on the long-term effectiveness of these medications, coverage is expected to remain a debated issue. Employers considering coverage often require counseling or participation in lifestyle programs to reduce reliance on these drugs over time. Brokers can play a pivotal role in helping clients leverage HRAs to offset these costs, allowing employers to cover high-cost treatments like GLP-1 drugs while managing overall healthcare expenses and reducing risk exposure.
An emerging trend within employer-sponsored coverage is the increase in "opt-out" incentives. Among firms with ten or more employees, 9% offer financial compensation or additional benefits to employees who opt for coverage through a spouse’s plan, and 11% provide similar incentives if employees decline coverage altogether.
These inducements reflect employers’ strategic cost-management approaches, especially as 95% of small firms and nearly all large firms (99%) offer spousal coverage. Large firms increasingly place conditions on spousal enrollment, with 10% barring spouses who have access to other coverage and 13% applying surcharges or other restrictions.
In 2024, more employers are expanding benefits to support family-building efforts, reflecting a growing awareness of employees' needs related to fertility and adoption. Among firms with 200 or more employees offering health benefits, 37% cover fertility medications, 26% cover intrauterine insemination, and 27% provide in-vitro fertilization (IVF) coverage. Additionally, 12% offer cryopreservation benefits, often for egg or sperm freezing, and 13% support adoption services.
However, there remains significant uncertainty among large employers, with many reporting "don't know" regarding the scope of their family-building benefits. This mixed level of certainty suggests an ongoing evolution in family-building support as employers assess the most effective and relevant benefits for their workforce.
The United States Supreme Court decision in Dobbs v. Jackson and subsequent state actions to regulate abortion have sparked heightened interest among employers regarding abortion coverage in their health plans. However, despite the increased focus on this issue, there remains considerable confusion and a lack of clear information on how employees' coverage is being affected. In 2024, large firms exhibited subtle shifts in their abortion coverage policies compared to the previous year, highlighting both evolving stances and persisting uncertainties.
In 2024, the percentage of firms covering legally provided abortions in most or all circumstances decreased slightly from 32% in 2023 to 29%, while those covering abortion only under specific circumstances, such as cases of rape, incest, or life endangerment, remained steady at 18%. Additionally, the number of firms excluding abortion coverage altogether dropped from 10% to 8%. However, uncertainty around abortion coverage grew, with 45% of firms responding "Don’t know" about their policy—up from 40% the previous year—an ambiguity more common among smaller firms with 200 to 999 employees. Meanwhile, the percentage of firms offering or planning to offer financial assistance for out-of-state abortion travel expenses decreased from 7% in 2023 to 5% in 2024. These changes reflect both cautious policy adjustments and a continuing uncertainty among employers in navigating the complex landscape of abortion coverage.
New federal rules now mandate that health plans give enrollees real-time access to cost estimates and cost-sharing details. Among firms with 200 or more employees offering health benefits, opinions vary on the impact of these requirements. Forty-one percent believe that offering this additional information will greatly aid employees in making informed healthcare decisions, while 38% expect it will be somewhat helpful, and a smaller portion—15% and 2%, respectively—believe it will be of little to no benefit.
Regarding cost control, 13% of these firms anticipate the new rules will significantly reduce overall health spending, 50% expect a moderate reduction, and 24% foresee only minor savings, with 7% seeing no impact on spending.
So, while there is optimism that real-time cost-sharing information will improve employees' healthcare decision-making, this transparency alone will not fully address the underlying drivers of rising healthcare costs.
As health insurance costs continue to challenge employers, Individual Coverage Health Reimbursement Arrangements (ICHRAs) and Qualified Small Employer HRAs (QSEHRAs) have emerged as essential tools, providing adaptable, cost-effective benefits solutions.
The adoption of ICHRAs and QSEHRAs has continued its steady climb, with ICHRA showing almost 30% growth from 2023 to 2024, driven largely by a sharp increase in uptake among Applicable Large Employers (ALEs) of 50 or more full-time employees.
The data shows that hundreds of thousands of U.S. workers across all 50 states and DC are now offered either ICHRA or QSEHRA as a health benefit.
One of the most impactful aspects of ICHRA and QSEHRA adoption has been their role as entry points for employers offering health benefits for the first time. Smaller employers, who have often struggled to find affordable group plan options, are adopting these HRAs as accessible and flexible alternatives to traditional health insurance. Among new adopters, 83% were not able to provide health coverage prior to adopting ICHRA or QSEHRA, highlighting the role of these HRAs in expanding coverage. This trend continues to support the ACA marketplace, bringing a new pool of insured lives into the system and allowing younger, healthier workers to stabilize the risk pool, ultimately benefiting the overall healthcare landscape.
Large employers are adopting Individual Coverage Health Reimbursement Arrangements (ICHRA) at a rapidly increasing rate, with adoption growing by 84% between 2023 and 2024. This surge is expanding access to flexible health coverage for a broader segment of the workforce, reaching more U.S. workers and their families. The increase in ICHRA adoption underscores a shift toward customizable, cost-effective benefits, which helps meet the diverse needs of today’s workforce and enhances employee satisfaction.
The 2024 landscape of employer-sponsored health benefits reflects persistent challenges and adaptive solutions. Rising premiums and high deductibles are pushing employers to explore flexible options, such as Individual Coverage HRAs and self-funding. Demand for high-cost treatments like GLP-1 drugs and family-building services highlights the need for customized benefits, even as employers strive to manage costs and improve transparency.
As brokers and PEOs navigate these trends, a focus on flexibility, transparency, and cost management will be essential to support employers in offering competitive benefits that align with the evolving expectations of today’s workforce.
Our team knows the ins and outs of the health insurance marketplace and will guide you towards the solution that make the most sense for your business and your team. Come with questions! Our experts are happy to dig into the details to get you the clarity you need.
During the call, Liferaft will run a cost-benefit analysis on your company's current healthcare spending and show you different ways you can save—without sacrificing plan quality. After your consult, Liferaft will design a unique plan for your employee's health insurance, including suggested plans and accounts, plan policy documents, and the annual budget.
