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Small Business Employee Benefits and HR Blog

Analysis of Health Plan Rates - Individual vs. SHOP Exchanges (2014)

December 9, 2013
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How will individual and small group health insurance rates compare in 2014? This is a common question from brokers, employers, and employees as they determine their health benefits strategy for 2014 -- especially as they weigh "pure" defined contribution vs. a traditional small group health plan. This article provides an analysis of average rates in 2014 for plans offered on the individual and small business SHOP exchanges.rate_analysis

Rate Analysis - Individual vs. Small Business SHOP Exchanges 

To get a big picture snapshot of 2014 rates, we took the published plan rates for all plans being offered in the individual and small business SHOP exchanges - in the 36 states using the federally-run healthcare.gov.

The intention of the chart and data analysis below is to provide a broad analysis, comparing individual vs. small group SHOP exchange plans nationwide. Admittedly, this is limited in scope and overlooks important regional and plan variances. However, the resulting data provides a big-picture look at individual plans vs. small group plans offered on the federally-run exchanges in 2014.

Employers and consumers should work with a health insurance broker to check specific rates and plans available to them in their region.

chart_2014_plan_rates

Chart Source: Zane Benefits

Rate Analysis & Assumptions

  • On average, individual health insurance costs employees less than group health insurance in 2014. Without the individual health insurance tax credits factored in, coverage under small group health plans are 9-10% more expensive than individual health insurance. 

  • For employees eligible for discounts on individual health plans, the tax credits can decrease the cost significantly (see this overview of the health insurance tax credits). When you factor in the tax credits, coverage under individual health insurance is much less expensive than small group coverage (in the example provided with an individual earning 250% FPL, the savings were 51% to 173%).

  • The chart above shows monthly premium averages (in the 36 states using healthcare.gov) of individual and small group health insurance plans in 2014. Two income levels are shown as examples – an income that receives a discount (250% FPL) and an income that does not (500% FPL).

  • The chart includes averages across all health plans offered in the individual and small group SHOP) exchanges -- in the 36 states using the federal Marketplace (healthcare.gov). The rates assumed non-smokers, and they are averages taken across all different coverage plan types.

  • To calculate specific discounts by income and family size: 

    • Use health insurance tax credit ("subsidy") charts (like these), or

    • Use an online health insurance tax credit calculator (like this one, or this one).

Is this a helpful comparison of ACA individual and SHOP health plan rates in 2014? What health benefits approach are you taking in 2014? Join the discussion in the comments below.

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