Healthcare Costs Ate my 401(k) Contributions


By Rocke Blair, national practice leader, Sheridan Road Human Capital Institute

The Kaiser Foundation reports in its 2018 Employer Health Benefits Survey that employee health insurance premiums increased 20 percent over the past five years while earnings only increased 12 percent.

What this means is employees are paying $5,547 toward the cost of their coverage (not including the average deductible of $4,675 and $14,700 out-of-pocket maximum) on an average annual income of $58,000 for a middle-class family.

All in, 42 percent of gross annual income could be spent on healthcare expense for the typical American family leaving little room for credit card debt, student loan debt and a mortgage.

No wonder the average 401(k) contribution is only $3,944 or 6.8 percent of income, which puts employees far short of appropriate replacement income.


Here's a start:

  • Consider healthcare analytics to reduce waste in programs
  • Identify best providers based on value
  • Manage chronic disease for favorable outcomes that reduce medical spend.

And, as an employer, do you have a condition-based wellness program that's measurable? If not, you risk decreased retained earnings, an eroding market position, and increased business risk from the ripple effect of poor employee health.

Effective wellness programs are more than Fitbits and gym memberships--they need to address chronic disease, poor health habits (i.e. tobacco, alcohol, eating habits, obesity, etc.) for measurable impact.

Without measurement, success is hard to define. Develop a process based on data, analytics and insights for quantifiable results that creates a healthy workforce by reducing waste and improves retirement readiness.


Learn more from Rocke Blair, national practice leader at Sheridan Road Human Capital Institute when he presents ‘$1 to Spend: The Convergence of Healthcare and Qualified Plans’ at out 2019 IN-VALUE-ABLE National Conference & Expo, Feb. 12-13 in Cleveland, OH. Read more.

Ready to take control of your employee healthcare & benefits costs?