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How much does group health insurance cost?

Written by: Josh Miner
November 11, 2020 at 9:26 AM

As employers research health insurance coverage options, it is common for them to evaluate different strategies and their associated costs.

So, just how much does group health insurance cost? In 2020, Kaiser Family Foundation (KFF) found the average premium for single coverage was $622.50 per month, or $7,470 per year. The average premium for family coverage was $1,778.50 per month or $21,342 per year.

Group Health Insurance Costs

According to KFF’s survey, the average group health insurance policy totaled $7,470 a year for single coverage in 2020. On average, employers paid 83 percent of the premium, or $6,227 a year. Employees paid the remaining 17 percent, or $1,243 a year.

For family coverage, the average policy totaled $21,342 a year with employers contributing, on average, 74 percent or $15,754. Employees paid the remaining 26 percent or $5,588 a year.

Source: KFF Employer Health Benefits Survey, 2020

These costs reflect national U.S. averages. There are several factors influencing policy costs for your organization, including:

  • Location
  • Employee census (demographics)
  • Number of participants
  • Carrier
  • Plan coverage
  • Plan structure
  • Network of providers

See how much small employers offered to employees with a QSEHRA last year: Download the report

Group Health Insurance Costs On the Rise

As you research policies, keep in mind that group health insurance costs are on the rise.

According to KFF, since 2010, average family premiums have increased 55%, which is at least twice as fast as wages (27%) and inflation (19%).

In 2020, 83% of covered workers have a deductible in their plan, compared to 70% a decade ago. The average single deductible in 2020 for workers who have one was $1,644, compared to a $917 average in 2010. These two trends result in a 111% increase in the burden of deductibles across all covered workers.

Is there an alternative to paying group health insurance costs?

Yes. Employers can control their health insurance costs with a simple solution: reimburse premiums instead of paying for them.

In other words, employers may reimburse employees tax-free for their individual health insurance premiums by establishing a formal, compliant health reimbursement arrangement (HRA) like a qualified small employer HRA (QSEHRA) or an individual coverage HRA (ICHRA). By doing so, employers are able fix their costs on a monthly basis, and employees can choose an individual health insurance policy that best meets their health and financial situation.

Aside from offering more choices, individual health insurance reimbursement is a cost-effective solution for employers who want to provide health care benefits to their employees.

Take our quiz to find out which HRA is best for your organization

Conclusion

When evaluating the costs of group health insurance, it can be helpful to understand national trends and to receive detailed quotes from an agent. And, if the costs or complexity of group health insurance are too high, one option for controlling costs while offering employees quality health benefits is with an individual health insurance reimbursement program.

What questions do you have about the cost of group health insurance? Leave a question or comment below.

The article was originally published in September 2014. It was last updated November 11, 2020.

Topics: Health Insurance, Healthcare Costs

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