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Small Business Employee Benefits and HR Blog

Individual Exchange Health Plans Cheaper than Employer Plans [Analysis]

Individual Exchange-based health plans are cheaper than employer health plans. It's controversial to say, however a recent analysis by PricewaterhouseCooper's Health Research Institute found that "across the board, at every level, average individual Exchange premiums are lower than this year’s average premiums for employer-sponsored coverage."

The analysis by PricewaterhouseCooper (PwC) finds that premiums for individual health plans offered on the ACA Health Insurance Exchanges are comparable to, and often times lower than, similar employer-based group health plans. Additionally, most Exchange shoppers have a wider variety of plans on the Exchanges than the typical employer-sponsored offering.

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PwC researchers analyzed the cost of individual Exchange premiums compared to employer-sponsored premiums. The analysis was based on data of employer-sponsored premiums of 156 million people in 2013. The analysis compares the premiums paid by employers for single worker coverage to premiums paid for similar individual health insurance coverage in public Exchanges.

The analysis found that the median 2014 individual Exchange premium (for a plan with coverage similar to that of the average employer-sponsored plan) was $5,844 a year. 

By comparison, the average employer premium for a single worker was $6,119 a year, a difference of 4%.

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The cost difference varies depending on the type of coverage and carrier. For example, individual health plans offered in the Exchange are categorized by metallic tiers of coverage, with "Platinum" providing the highest level of coverage.

Additionally, the Exchange premium costs did not include premium tax credit discounts, which lower the Exchange premium cost even more for eligible policy holders.