Total health benefit cost rose 3.4% on average in 2020 (Fig. 1), reaching $13,674 per employee among all US employer health plan sponsors with 50 or more employees, according to the annual Mercer National Survey of Employer-Sponsored Health Plans 2020.

Large employers (those with 500 or more employees) reported a cost increase of just 1.9%, their lowest increase since 1997, as plan members avoided health care facilities due to the pandemic (Fig. 2). Large employers typically self-fund their plans, which means they may see costs fall as utilization falls, unlike fully insured employers that pay a fixed premium. Survey results suggest that many large employers plan to use money saved in 2020 to invest in programs to support and engage employees in 2021.

“The need to minimize exposure to the virus and ease the strain on overloaded health facilities caused many people to forgo care this past year, which translated to slower cost growth in 2020. Heading into 2021, that’s allowed employers to avoid cost management tactics like shifting cost to employees,” said Tracy Watts, a senior consultant at Mercer. “Instead, we’re seeing many focus on supporting employees with additional resources to help keep them engaged, productive and healthy during these tough times.”