16% of salary increase goes to pay for the increase in health care costs next year
|Healthcare Costs||2006||2007||Change '06-'07|
|Healthcare Rate Increase||7.9%||7.7%|
|Average health cost per person||$7,744||$8,340||7.70%|
|Average employees contributions||$1,576||$1,678||6.47%|
|Average employee out-of-pocket costs||$1,489||$1,627||9.27%|
|Source: Hewitt Associates|
Hewitt predicts that increases in employee contributions will continue to offset salary gains for many workers next year. In 2007, Hewitt projects, salaried employees can expect a base salary increase of 3.7%. Therefore, an employee making $40,000 today who receives the average salary increase ($1,480) will use 16% of that salary increase to pay for the increase in health care costs next year.
Increases by Plan Type
On average, Hewitt forecasts that companies will experience 2007 cost increases of:
- 7.0% for preferred provider organization (PPO) plans,
- 8.0% for health maintenance organization (HMO) plans
- 9.0% for point-of-service (POS) and indemnity plans.
That means from 2006 to 2007, the average cost per person for major companies will increase from $7,744 to $8,340 overall; $7,547 to $8,151 for HMOs; $8,287 to $9,033 for POS plans; $7,735 to $8,227 for PPOs; and $7,816 to $8,520 for indemnity plans.