For Lower Health Insurance Costs, it Pays to Travel in Groups

Consumers hard-pressed by rising individual and family health insurance premiums may want to see if they qualify for small business coverage instead. That’s one take-away from a recent eHealth report that examined health insurance costs and trends among small businesses with fewer than 30 employees.

eHealth’s Small Business Health Insurance: Costs, Trends and Insights report found that the average per-person monthly premium for a small business health plan was 7 percent lower than for those who bought an indivdiual health insurance plan at eHealth in 2018 without the help of Obamacare subsidies ($409 v. $440, respectively). Annual deductibles also were cheaper: 31 percent less than the deductibles for individual plans ($3,140 vs. $4,578).

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Along with lower costs, small businesses generally get more bang for their insurance buck. Companies were more likely to choose a Silver or Gold-level plan than people who bought health insurance on their own (78 percent versus 42 percent of individual buyers).

The April, 2019 report highlighted 6 big takeaways about the small business health insurance market, how small business owners feel about the coverage they offer their employees and what they worry about for the future. 

1. Small business health insurance costs are more stable than coverage in the individual market: While the average per-person premium for small business coverage increased by just 5 percent between 2015 and 2018, average premiums for unsubsidized individuals who bought their own coverage at eHealth jumped by 58 percent during the same period percent (from $286 in 2015 to $440 in 2018).

2. Average small-business premiums were down in 2018, but deductibles increased: The average per-person premium for small business health insurance plans decreased 2 percent between 2017 ($416) and 2018 ($409). However, the average individual deductible for small business plans increased 14 percent in the same period (from $2,754 to $3,140).

3. Group size can make a big difference in premiums. In 2018, the average monthly premium for groups with five or fewer employees was $419 per covered person. In contrast, the average monthly premium for groups with six to 29 employees was $364, or 13 percent less. Deductibles, however, were essentially the same for both larger and smaller groups at $3,140.

4. Most small businesses are happy with coverage but concerned about costs: 82 percent of small business owners said they were happy with their employer-sponsored health insurance plan, although 83 percent expressed concern about future cost increases. Significantly, 63 percent said an increase of 15 percent or less in monthly premiums would make their current plan unaffordable.

5. Most small businesses worry about employees’ ability to afford the cost of coverage and care: 77 percent were either very concerned (39 percent) or somewhat concerned (38 percent) about employees’ ability to afford premiums and deductibles.

6. Strategic considerations often drive adoption of small business coverage: 66 percent of small business owners said offering insurance overage helps them hire and retain the best workers, and only 4 percent of small business owners said the repeal of the ACA tax penalty will encourage them to stop offering employer-sponsored coverage. More than half (53 percent) of small businesses responding to eHealth's survey said that  the cost of offering health insurance to their employees hasn't prevented them from giving raises or hiring additional workers. 

You have to have at least one full-time paid employee on your pay roll to qualify for small business health insurance, though rules may vary by state.

Want to know more about the state of the small group health insurance market? Read the full report.



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