Editor’s Note: This article has been updated with the most recent group health insurance cost information. The article was originally published in September 2014.
As small employers research health insurance coverage options, it is common to evaluate different strategies and the cost. So, just how much does group health insurance cost? In 2018, Kaiser Family Foundation (KFF) found the average premium for single coverage was $575 per month, or $6,896 per year. The average premium for family coverage was $1,635 per month or $19,616 per year.
Group Health Insurance Costs
According to KFF’s survey, the average group health insurance policy totaled $6,896 a year for single coverage in 2018. On average, employers paid 82 percent of the premium, or $5,711 a year. Employees paid the remaining 18 percent, or $1,186 a year.
For family coverage, the average policy totaled $19,616 a year with employers contributing, on average, 71 percent or $14,069. Employees paid the remaining 29 percent or $5,547 a year.
These costs reflect national U.S. averages. There are several factors influencing policy costs for your business, including:
- Employee census (demographics)
- Number of participants
- Plan coverage
- Plan structure
- Network of providers
For quotes on available plan choices and cost, contact a licensed health insurance agent in your state.
Group Health Insurance Costs On the Rise
As you research policies, keep in mind group health insurance costs are on the rise.
According to KFF, from 1999 to 2018 premiums increased 214 percent for single coverage and 239 percent for family coverage. Additionally, deductibles are rising much faster than premiums, wages, and inflation. In 2018, 85 percent of covered workers were in plans with an annual deductible (up from 78 percent in 2013), with an average deductible of $1,573 for single coverage.
Increasing costs pose challenges for many smaller employers and their employees. While 98 percent of large employers (200 or more workers) offer coverage, less than half (47 percent) of the smallest employers (3 to 9 workers) offer coverage.
In fact, small businesses report their health insurance costs have nearly doubled since 2009, with 91 percent of small businesses reporting increases in their health plan at their most recent health insurance renewal.
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 care reimbursement plan. 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 needs.
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.
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 risks 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.