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Firms expect 6%-plus rise in medical insurance costs: NY Fed

“Employee benefits once again exhibited the steepest price increases” compared with wages, insurance and other commodities, the bank said.

Costs for medical insurance and employee benefits are

Costs for medical insurance and employee benefits are up, according to the Federal Reserve Bank of New York. Photo Credit: Getty Images / iStock

Service firms in the metropolitan region and factories across the state expect their cost for medical insurance and other employee benefits to increase more than 6 percent this year, according to the Federal Reserve Bank of New York.

The bank, in a survey of retailers and other service firms on Long Island, in New York City and its northern suburbs last month, found they are forecasting their employee benefit costs to rise an average of 6.6 percent this year. That’s on top of an average increase of 6.3 percent in 2017.

In a similar poll of manufacturers in New York State, the bank found they are expecting their employee benefit costs to rise 6.2 percent this year after increasing 6.3 percent in 2017.

About 100 businesses participated in each poll and the same questions have been asked annually by the New York Fed since 2014.

“Employee benefits once again exhibited the steepest price increases” compared with wages, insurance, outside services, energy and other commodities that companies must pay for, the bank said last month.

Among factories, wages are their second-fastest growing cost.

Poll respondents predicted employee pay will climb an average of 3.7 percent this year. That’s on top of an average rise of 3.4 percent in 2017.

Among service firms, wages are their No. 3 cost after employee benefits and insurance.

Poll respondents forecasted employee pay will increase an average of 2.9 percent this year after a 3.1 percent rise in 2017.

The state minimum wage increased by $1 or more per hour at the end of 2016 and 2017 as part of a phased increase where the rate will eventually reach $15. On Long Island, the hourly minimum is $11 and will reach $15 by 2021.

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