You might wonder whether what you’re paying each month for your employees’ health insurance is in line with what other employers are paying. For small businesses, the Affordable Care Act (ACA) has stabilized the cost of coverage. The Commonwealth Fund says the ACA has caused the rate of premium increases to fall by half since 2010. It has also prompted more small businesses to buy coverage for their workers, because coverage is more affordable than in the past.
Before the ACA, in 2008-2010, the average annual percentage increase in the small business market was 10.4%. Post-ACA, from 2011 to 2015, the average dropped to 5.2%. Data from the Kaiser Family Foundation (KFF) shows small business premiums have been more stable than individual health plan premiums.
Many Factors Influence Costs
There are many things that could affect a group’s health insurance costs, including:
- The number of employees (both full-time and part-time)
- Whether coverage is for employees only or employees and their eligible dependents
- The ages of all enrollees – employees and dependents (if covered)
- Business location (What is your California Geographic Rating Area?)
- Residence ZIP Codes of employees (Rates are tied to the member’s ZIP Code.)
- The coverage selected (traditional health insurance, self-funding, level-funding, etc.)
- Selected ACA metal tier (Bronze, Silver, Gold, Platinum)
- Plan or plans offered: HMO, PPO, EPO, HSA-qualified health plan, or others
- The contribution the employer makes toward employees’ premiums (Most insurers require a 50% or more contribution on employer-sponsored health insurance benefits.)
- Whether added benefits for Dental, Vision, or other coverage are made available – and whether they will be offered on an employer-sponsored or voluntary basis.
In most states, tobacco use is also a rate consideration; however, in California and a half-dozen other states, tobacco use does not affect insureds’ premiums.
KFF Survey Findings on Costs
Employer-sponsored health insurance is the largest source of coverage for non-elderly U.S. residents. More than sixty percent of those under age 65, nearly 165 million people, had insurance through their employer in 2023 according to the KFF Employer Health Benefits Survey.
Last year, the average annual premium for employer-sponsored health insurance was $8,435 for single coverage and $23,968 for family coverage. Both were up seven percent year over year.
As far as employer contributions to plan costs, most workers in 2023 contributed to the cost of coverage. On average, the employee contribution toward single coverage was 17%, while the family coverage contribution was 29%. At smaller firms, the share for family coverage was greater, 38% vs. 25%. According to KFF, the average annual contribution in 2023 was $1,401 for single coverage and $6,575 for family coverage.
If you want to discuss changing your contribution to your employees’ coverage, ask your broker. With CaliforniaChoice, you can change your employees’ options and your plan contribution at renewal. It’s your choice!