Restaurants Aren’t Raising Employee Medical Premiums, But Costs Are Going Up

Last month, our article summarized the “state of the market” for employee benefits in the restaurant sector. We warned that medical trend (the rate of increase in medical plans) would be increasing in 2022 and in 2023. Since that publication, there’s even more disturbing news: a recent Wall Street Journal article noted that due to the high cost of labor, hospitals are considering significant cost increases—even considering breaking current PPO contracts. 

As a result, we want to drill down further into why restaurants most often must absorb the cost increases themselves and can’t share these with employees. Then we’ll review the best strategies for plan cost management. 

Medical TrendAccording to Segal and Mercer Surveys, 2021 Medical trend was 7.3 percent and Rx trend was 8.4 percent. This drove an average rate increase of 9.6 percent for employers with between 50 and 500 lives. While the existing studies indicate similar trend rates for 2022 and 2023, as mentioned…