Health Insurance Cost | What is the Cost of Group Health Insurance 2023?

When it’s time for a business to consider buying group health insurance plans, the cost is usually the first thing that comes to mind. Affordable business health insurance is something that nearly everyone seeks. Doesn’t matter if you are running a a small business or large business, it is wise to provide your employees with quality yet reasonable group health insurance plans.

Delivering a low cost group health insurance plan with unique health benefits and reliable health coverage is one of the most recommended methods for small businesses to increase employee longevity while attracting qualified individuals also interested in long-term employment.

Unfortunately, there is no quick way to calculate the premium cost of your desired group plan. Some insurance brokers are able to give an estimate for group health insurance cost based on some basic information given to them by large and small business owners.

However, an accurate quote for a group health plan cannot be determined until everything included in the medical care plan is priced out accordingly and your company’s group size is calculated. The group size of your business is based on state law or the standards set by the ACA. Large group health insurance costs less than small group plans.

How to Get the Most Affordable Group Health Insurance Plan

To get the most out of your group health insurance plan, there are ways to minimize the employee premiums costs a little more. Aside from hiring an insurance broker to help you find the most affordable group health plans, your ability to meet the standards of local, state and federal health laws will qualify your company for tax credits. Your broker will monitor and perform audits to ensure your health insurance plan always complies with insurance laws.

An insurance broker will take the time to modify your group health plan however necessary to make sure you receive the most health insurance coverage at the lowest cost. They will negotiate with insurance carriers, play with coverage percentages, and tailor your group benefits. This is something only an experienced broker is able to do successfully.

There are other ways your business will profit when you have a group plan available. You’ll notice that your business spends less money towards advertising, hiring and training than ever before. Other significant financial situation stresses are also known to decrease due to appealing group health plans. Your company’s ability to retain employees through a group health plan is one of the greatest influences to an increased profit margin.

How Much is the Actual Cost for Group Health Insurance Coverage?

Rising medical costs and health care expenses makes it important for the employers to think twice about offering the best group health benefits to their employees.

Group health insurance plans cover all your employees when you purchase them by paying a health insurance premium. These are called fully insured group plans.

Now coming to the actual cost for the health care coverage, as per the Kaiser Family Foundation (KFF) survey report in 2021, there has been a 4% rise for the average premium for an employee’s individual health insurance and family coverage. Now the health plan average premium is $22,221 for employer-sponsored family coverage of employees, and the employees paying an average of $5,969 for their health care coverage.

Many small business owners reviewed and modified their covered workers for using telemedicine service and wellness programs due to covid-19. Thus, the actual annual premiums have risen to cover the healthcare costs.

What is the Cost for Employers to Purchase Group Health Insurance Plans?

Every employer has a fixed budget to pay for the health insurance premiums of their employees, not only to provide the best health coverage in case of hospitalization, but also to retain valuable employees.

According to a 2021 report by Kaiser Family Foundation, the average cost of health plan for employers is $16,253 per annum, or 3/4th of the annual premium, to provide healthcare coverage for family. Similarly, the average cost for individual health insurance for employees is $6,440 (83% of total premium cost).

Rise and Rise of Group Plans

This is an increase of 22% of health insurance in the past 5 years. To get the best large and small group health plans, you need the best health insurance broker. Taylor Benefits Insurance Agency helps both the employer and employee to get the best health plan from reputed health insurance companies.

What is the Average Deductible Cost for Employees to Enroll for Group Health Insurance?

Many factors decide the amount to be paid by the employees for employer sponsored health insurance.

As per the latest 2021 report by KFF, employees pay $5,969 per annum for their family coverage, which is approximately 27% of the total premium. Similarly, for their own individual health coverage, employees pay $1,299, which is approximately 17% of the total premium. The average annual deductible cost for the employee’s group coverage is typically taken through monthly payroll deduction from their salary.

It is a well-known fact that monthly premiums to provide health insurance keeps on increasing year by year. In 2021 itself, a 4.7% rise was seen for employee benefit plan.

When the employee is paying for a health plan with pretax dollars, the deduction is removed from the total gross income before you pa the income tax.

What Drives the Group Health Insurance Cost

One can’t deny the fact that health insurance constitutes a major portion in the company’s expenditure, at the same time it is the most valuable investment one can make for their employees.

When you are well aware of what drives the costs for health insurance coverage, you can get the best employer sponsored health insurance at lower premiums.

Following factors contribute primarily to the cost of health insurance

• Plan structure
• Plan coverage
• Number of participants in the employer sponsored health insurance
• Carrier
• Employee census (demographics)
• Location
• Total number of network hospitals
• Supplemental plans to provide coverage and tax credit
• Amount contributed by you (you can always shift the burden of insurance cost to your employees)
• Average wages and payroll taxes
• The age profile of your employees or how you plan for “risk group” at your company. For example, older age group will need higher coverage options, which will add to your monthly premiums cost.

Other factors

Note: Health insurance costs gets affected by the demographics of your employees, and the place of your small business office. Insurance companies decide premiums by the age profile and location of the employees to be covered before giving the policy advice. Other contributing factors can be the coverage options and specific supplemental health plans.

Medical history covering pre-existing medical conditions will not affect your premium amount and coverage under the Affordable Care Act.

Costs Included in a Small Group Health Plan

Small group health insurance plans can be paid through different payments options, such as deductibles and premiums. It is similar to individual small business health plans.

• A premium is a consistent payment made monthly or yearly by the policyholders to remain enrolled in health care scheme. They get the rebate for the same as tax credit in income taxes as per the rules by internal revenue service.
• A deductible is an amount paid by a policyholder before his insurance starts contributing to medical expenses.

Example of Single Coverage

To illustrate it let us take an example. Consider you are contributing a premium of $400 a month and a deductible of $1000. It means you need to pay $400 each month to continue your plan. Let us assume if you incur an amount of $2500 medical bills yearly, you must pay $1000 before the insurance company starts contributing it’s share.

Henceforth, you’ll typically pay a coinsurance for each doctor visit in your single coverage plan.

What are out-of-pocket costs?

Payments made by you personally for covering medical services are termed as out-of-pocket costs. It is usually a higher amount and similar to deductible. As soon as it is achieved, health insurance company will pay completely for any covered health care costs for the remaining period.

Small businesses, freelancers union, and individuals generally needs to pay the out-of-pocket costs.

Commonly Asked Questions About Health Insurance Cost

How much does small business health insurance cost per employee?

The average annual premium for employer-sponsored health insurance in 2023 was $7,911 for single coverage and $22,463 for family coverage. This means that the average monthly premium for single coverage was $659 and the average monthly premium for family coverage was $1,872.

The cost of small business health insurance per employee varies depending on a number of factors, including:

• The location of the business
• The size of the business
• The age and health of the employees
• The type of health insurance plan
• The level of coverage

Small businesses can also take advantage of government programs that help to offset the cost of health insurance. For example, the Small Business Health Care Tax Credit can help small businesses offset the cost of premiums for their employees.

If you are a small business owner, it is important to shop around for health insurance quotes from different insurers. You should also consider the factors that affect the cost of health insurance so that you can choose the best plan for your business and your employees.

How much does health insurance cost for employers?

The cost of health insurance for employers varies widely based on several factors, such as the type of plan, the geographic location, the size of the company, the health of the workforce, and more. 

1. Average Costs: According to the Kaiser Family Foundation’s 2020 Employer Health Benefits Survey, the average annual premium for employer-sponsored health insurance in the United States was $7,470 for single coverage and $21,342 for family coverage. However, these are just averages; costs can vary widely.
2. Employer vs. Employee Contributions: Typically, employers do not cover the entire premium cost. The same survey found that, on average, employers covered about 83% of the cost for single coverage and 74% for family coverage, with employees covering the rest through payroll deductions.
3. Size of the Company: Smaller companies often pay more for health insurance because they have less bargaining power and a smaller risk pool. Larger corporations can often negotiate better rates due to their size.
4. Plan Type: High-deductible health plans (HDHPs) generally have lower premiums than more traditional plans, but they also mean higher out-of-pocket costs for employees.
5. Geographic Location: The cost of healthcare varies by region, so the location of the company can impact insurance premiums. For example, health care might be more expensive in urban areas compared to rural areas.
6. Industry and Workforce: Industries with a higher risk of injury (like construction) might have higher health insurance costs. Similarly, an older workforce might lead to higher premiums due to increased health risks associated with age.
7. Increases Over Time: Health insurance premiums have generally increased over time, often at rates above inflation.
8. Additional Costs: Beyond premiums, employers might also incur additional costs, such as administrative costs for managing the health benefits, contributions to Health Savings Accounts (HSAs) or Health Reimbursement Arrangements (HRAs), and wellness program costs.

Health insurance costs can be different in other countries, and the situation might have evolved since then. Employers should regularly review and benchmark their health insurance offerings and costs, possibly with the help of insurance brokers or consultants, to ensure they are competitive and cost-effective.

How can I lower my employer health insurance cost?

Reducing employer health insurance costs requires a combination of strategic planning, wellness initiatives, and being informed about the insurance market. Here are several strategies employers can consider to lower health insurance costs:

1. Shop Around: Engage a knowledgeable insurance broker or consultant who can help you compare different insurance carriers and plan designs to find the most cost-effective option.
2. Increase Deductibles and Copays: By raising deductibles and copays, you can reduce premium costs. However, this also shifts more of the financial burden to employees, so it’s crucial to find a balance that is both cost-effective and fair to staff.
3. Offer High Deductible Health Plans (HDHPs): HDHPs often have lower premiums and can be paired with Health Savings Accounts (HSAs) to allow employees to save for medical expenses pre-tax.
4. Wellness Programs: Invest in wellness initiatives that promote healthy behaviors. This can reduce the incidence of chronic diseases and reduce future health care costs.
5. Chronic Disease Management: Offer programs that help manage chronic conditions like diabetes, hypertension, and obesity. Proper management can prevent expensive complications.
6. Promote Telehealth: Encourage employees to use telehealth services, which can often provide care at a lower cost than traditional in-person visits.
7. Offer Multiple Plans: Give employees a choice of plans, allowing them to select the one that best fits their needs and budget.
8. Employee Education: Ensure employees understand their benefits, how to seek cost-effective care, and the value of preventative services.
9. Join a Purchasing Coalition: Especially for smaller employers, joining a coalition can help negotiate better rates by increasing the size of the insured pool.
10. Self-funding or Level-funding: Rather than purchasing a traditional insurance policy, some companies choose to self-fund their health benefits, which can save money in the long run but comes with more financial risk.
11. Implement Narrow or Tiered Networks: Consider plans that limit coverage to a select group of providers (narrow network) or that charge lower copays or coinsurance for using “preferred” providers (tiered network).
12. Audit Dependent Coverage: Ensure that only eligible dependents (like current spouses or children) are covered by the plan. Periodic audits can find instances where ineligible individuals are receiving coverage.
13. Seek Employee Feedback: Regularly survey employees to understand what they value in a health plan. You might find areas where you can reduce costs without significantly impacting employee satisfaction.
14. Review Prescription Drug Plans: Consider strategies like promoting generic drug usage or using a pharmacy benefit manager (PBM) to get better drug pricing.
15. Re-evaluate Annually: The healthcare market changes regularly. Make it a practice to review your health insurance plan annually, or even more frequently if possible, to ensure you’re getting the best value.

By implementing a combination of these strategies, you can potentially reduce your health insurance costs while maintaining quality care for your employees. It’s also beneficial to regularly consult with experts in the field to stay updated on new cost-saving measures and market trends.

Conclusion

Every employee has an expectation from their employer to provide them a health benefit to cover rising medical costs. But, many organizations are not sure which health plan is best for their employees. We can help you by understanding your needs and offering the best possible health plan to cover your employees and their dependents. Give call today at 800-903-6066 and talk to one of our experts at Taylor Benefits Insurance Agency.

Todd Taylor

Todd Taylor, oversees most of the marketing and client administration for the agency with help of an incredible team.
Todd is a seasoned benefits insurance broker with over 35 years of industry experience. As the Founder and CEO of Taylor Benefits Insurance Agency, Inc., He provides strategic consultations and high-quality support to ensure his clients’ competitive position in the market.