Whether you’re an employer looking to provide the best possible coverage for your employees, or a healthcare professional committed to delivering high-quality care to all, it’s clear that understanding the impact of employer-sponsored insurance is key to building a healthier, more equitable future for all. The good news is that there are many options available to meet the unique needs of any sized business, from sole proprietorships to large corporations. In this blog post we will explore how much small business health insurance costs and show you some innovative ways to reduce your premiums without sacrificing quality coverage.

How much do Employers and employees contribute towards monthly premiums?

The Kaiser Family Foundation’s annual Employer Health Benefits Survey reveals the amount employers spend on health insurance premiums for their employees. In 2022, the average annual premiums for individual coverage cost up to $7,911, while premiums for family coverage were $22,463. 

Workers’ contributions to the cost of their healthcare premiums also remained stable in 2022. On average, employees pay around 17% for single coverage and 28% for family coverage. This means that, for 2022, employees kicked in a respective $1,327 for single coverage and $6,106 toward their family plans. These figures are also similar to 2021’s numbers, indicating a level of consistency in the healthcare landscape.

Inflation’s impact on small business health insurance 

While the premiums for 2022 are in line with those of previous years, the increase in workers’ wages and inflation has created a contrast. It seems that the premiums for 2022 were determined before the full impact of inflation was realized. But, as we continue to see inflation rates as high as 8%, it’s very likely that we will see a larger increase in premiums for 2023.

These numbers clearly indicate the weighty burden that healthcare expenses place on both employers and employees, highlighting the critical importance of adequate health insurance coverage.

How many workers are covered by employer-sponsored health plans?

Although it’s great news that over half of all companies provided some form of health benefits in 2022, the divide between large and small firms is still alarmingly wide. Bigger businesses tend to be more generous with over ninety percent (93%) of firms with more than 50 employees offering health benefits in 2022. 

However, smaller businesses are less likely to offer any benefits at all. In fact, the percentage of small firms providing health benefits fell from 59% in 2021 to 51% in 2022, which highlights the ongoing struggle for many workers to access affordable healthcare.

Affordable small business health insurance options

Small Business Health Options (SHOP) Marketplace

With SHOP, the federal government’s database for finding comprehensive health insurance coverage, you can easily compare plans from top-rated carriers. Not only that, but there are built-in filters to help you find the perfect plan, whether you need medication coverage, prescription drug reimbursement, hospital care, and more. Requirements for SHOP vary by state, but in order to qualify most businesses must:

• Have a physical work site within the state
• Employ between 2-50 full-time employees (excluding family members, partners or spouses)
• Offer coverage to full-time employees working 30 or more hours per week, and 
• Enroll at least 70% of employees in the insurance plan. 

With SHOP, small businesses can access affordable and comprehensive health insurance options for their employees.

The Individual Coverage HRA (ICHRA)

Small businesses looking for a flexible health benefits option should consider the individual coverage HRA (ICHRA). This innovative alternative to traditional group health insurance offers employers the freedom to choose it as their sole health benefit option or as an option for employees who do not qualify for existing group benefits. 

One of the key advantages of the ICHRA is its ability to cover both individual health insurance premiums and eligible out-of-pocket health costs. Even better, the ICHRA is suitable for employers of every size—there’s no employee count requirements or participation requirements to worry about. 

Qualified Small Employer HRA (QSEHRA)

With QSEHRA, employers can give their workers tax-free reimbursements for a variety of healthcare expenses, such as premiums and coinsurance payments. But, to be eligible, your business needs to:

• Have less than 50 full-time employees
• Provide the same arrangement to all full-time employees
• Not offer a group health plan or a flexible spending account (FSA)

With QSEHRA, the employer determines how much they want to contribute within an IRS-set limit, and employees can submit payment receipts for reimbursement from the program. Employers also don’t have to wait for open enrollment to offer a QSEHRA. Any time is a good time to provide this benefit to your employees. Just give them a heads up 90 days before the plan year starts. 

Self-Funded Health Insurance

By choosing a self-funded plan for employee health coverage, employers take on the responsibility of covering medical costs directly instead of relying on an insurance company. This can lead to more affordable rates and greater control over the plan. However, there is also the risk of potentially expensive claims, as there is no cap on annual claim liability. If your business is comfortable with this revenue management approach, it could end up saving you money in monthly fees and lead to savings if claims are lower than anticipated.

Concerned about taking on too much risk? Invest in stop-loss insurance. This type of coverage gives you a safety net by setting a maximum limit on the amount you’re responsible for paying towards your employees’ medical bills. Any costs beyond that limit are usually covered by the policy. By adding stop-loss coverage to your plan, you’ll be able to protect your wallet from unexpected expenses.

The Small Business Healthcare Tax Credit

Employers may be eligible for up to 50% of your employees’ premiums through The Small Business Health Care Tax Credit. This incredible benefit is available to companies that:

• Have less than 25 full-time employees
• Have an average employee salary of $56,000 or less
• Offer healthcare coverage to all full-time staff members
• Pay at least 50% of employees’ premium costs. 

Don’t miss out on this opportunity to take care of your valued employees while also saving on healthcare expenses. In order to claim this credit, small businesses must file IRS form 8941 with their taxes.

Shopping for small business health insurance

As a small business owner, finding affordable health insurance can be a daunting task, but Group-Health-Quotes.com makes it easy. Simply enter your zip code and answer a few questions about your business, and you’ll have access to free quotes from top insurance providers. Our online platform allows you to compare different plans side by side, giving you the ability to find the best option for your specific needs. 

Whether you’re looking for comprehensive coverage or a more budget-friendly option, our licensed agents are available to help you every step of the way. Don’t let the stress of health insurance weigh you down; visit Group-Health-Quotes.com today to get started.

Conclusion

As we’ve discussed, employer-sponsored insurance is an invaluable tool in both helping businesses provide quality coverage to their employees as well as creating a healthier, more equitable future. 

Not only does it allow employers to subsidize the cost of healthcare for their employees, reducing the financial burden on each individual and resulting in healthier employee populations overall, but it also helps ensure that people have access to higher quality health care that would otherwise not be available. 

However, with increasing premiums, many business owners may be hesitant to opt for employer-sponsored insurance without understanding how much small business health insurance costs or how they can find ways to reduce those premiums while still providing comprehensive coverage. Fortunately, employers can tailor their plan according to their size and budgetary restrictions while still ensuring the best possible coverage for their employees.

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About Traditional Small Business Health Insurance

Small business health insurance, also known as group health insurance, is available for companies with 2 or more employees. The employer pays a fixed premium cost and can make employees contribute to these costs as well. Employees, and possibly their dependents, are responsible for copays and deductibles.

Employers can purchase coverage through the government’s Small Business Health Options (SHOP) marketplace or through an insurance broker. Here at Group-Health-Quotes.com, we can pair you with an agent or you can compare plans online!

When to Shop For a Plan

Luckily, as a small business, you can shop for health insurance coverage at any time of year without waiting for a special open enrollment period. However, once you select a plan, your premiums are locked in for the next year. During that year you can drop coverage for employees who leave or add new employees and dependents to your plan. At the end of the year, you can choose to renew your coverage or comparison shop for a new plan.

Reasons to Offer Health Insurance

It Can Save Your Business Money

Group health insurance for small businesses can secure a rate lower than what you or your employees would otherwise get on your own. Premiums will be less expensive because there’s more risk covered within one policy.

There are also tax incentives and credits available to employers. Through the Small Business Healthcare Tax Credit, you could get back up to 50% of what was spent towards employees’ monthly health premiums. The tax credit is available for businesses that fit all of the following criteria:

• There are fewer than 25 full-time employees  
• The average employee salary is $56,000 or less  
• You offer coverage to all of your full-time staff members  
• You pay at least 50% of employees’ premium costs 

Even if you aren’t eligible for the tax credit, the money you spend on employees’ health premiums could also be excluded from your taxable income, allowing you to still save money.

It Can Save Your Employees Money

According to a study by the Kaiser Family Foundation, nearly half of the American population relies on their employer to provide health insurance coverage. Employees particularly benefit from this arrangement because they are able to purchase policies for themselves and their families at lower prices than if they bought an individual policy on their own.

It Helps To Attract & Retain Top Talent

Health insurance is no longer just a privilege; it’s also essential. With high premiums and deductibles, your employees want the security of knowing they will be taken care of whether illness strikes or not.

According to The Kaiser Family Foundation’s 2022 Employer Health Benefits Survey, over half of all small businesses in America offer health benefits to their employees. If you’re looking to attract new talent, a competitive health plan can help you stand out amongst other companies.

Health Insurance Increases Productivity

Offering healthcare shows employees you care about their well-being outside of work. When their medical needs are being met, it leads to increased productivity and having less interference with work schedules due to sick days.

Conclusion

Health insurance can be a complicated process, but understanding the basics of what insurance entails and knowing how to choose one can make all the difference. It’s important to compare plans and talk with a licensed agent so that you’re fully equipped with knowledge when deciding to offer health insurance as part of your employee benefits package.

We hope this article has helped shed some light on small business health insurance, giving you the confidence to make informed decisions about what’s best for your company. If you’d like more assistance or would like to get started obtaining a free, personalized quote today, reach out to our team – we’re here to help!

Give us a call at (877) 658-2374 or enter your zip code in the bar above to get started.

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Healthcare can be costly and complicated, but offering your employees health insurance can reduce turnover, help you stay competitive as a business and lead to receiving tax credits.

According to the 2021 Kaiser Family Foundation Employer Health Benefits Survey, the average annual premium cost for a single employee was $7,813 and employers contributed 83% towards it. The average annual premiums for family coverage was $22,463.

Cost Factors

The type of plan you choose, your industry, employees’ ages, and location can contribute to your cost as well as premiums can be more costly in some areas than others. 

Small Business Health Plan Type 

PPOs are typically more expensive than HMOs, but they provide access to a larger network of doctors and medical providers. Because HMO plans have more restrictions, premiums and copays have lower prices while High Deductible Health Plans (HDHP) compensate for the high deductible with a lower monthly premium than other plan types. 

There are also POS, EPO, HRA & HSA plan types to consider. The best way to compare and contrast these options is by getting a customized quote for your business or speaking with a licensed agent.

Age of Employees

Age is a significant consideration when calculating group premiums. The average age of your employees can contribute to costs because health insurance companies understand that as people age, their healthcare costs naturally increase. 

21-year olds typically serve as the minimum age benchmark rate, with those younger than 21 enjoying lower rates and those over 21 paying up to three times more for coverage.

Industry

A 2022 U.S. Bureau of Labor Statistics study found that some industries like transportation, health care and utilities have higher average employer premiums. 

Tobacco Usage

Under the ACA, group health insurers are legally allowed to impose a tobacco surcharge; this results in smokers paying up to 50% more for their health insurance than non-smokers. This policy is designed to help incentivize individuals away from smoking and towards healthier lifestyles.

Location

Location can be a key factor in determining health insurance premiums, particularly when healthcare costs vary between regions. Health insurers must carefully evaluate components such as provider price structures to ensure accurate pricing for each geographic area and leverage negotiations with hospitals and physicians accordingly.

How to Save Money on Your Small Business Health Insurance Costs

The federal Small Business Health Care Tax Credit is a great way to save money on your employees’ premiums, but it’s only available if you pay at least 50% of their premium cost. So use this as an estimate when figuring how much insurance will cost your company in light of other expenses like wages, bonuses, etc.

In order to qualify for the Small Business Health Care Tax Credit, your business must:

• Have fewer than 25 full-time employees  
• Have an average employee salary is $56,000 or less  
• Offer coverage to all of your full-time staff members  
• Pay at least 50% of employees’ premium costs 

Conclusion

By shopping around and taking the time to compare health insurance plans, you can ensure that your business is getting the best coverage at the most affordable price. 

Group-Health-Quotes.com makes it easy to get free quotes online and comparison shop on your own, or you can call one of our licensed insurance agents for a free consultation. They will analyze your group’s needs and find the best plan for your budget. 

Give us a call today at (855) 687-6975  or enter your zip code in the bar above to get started!

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