The impact of COVID-19 on our lives is undeniable. For those who have lost their health insurance, it hits even closer to home. Especially now when health benefits are more important than ever, many are wondering what their options are.
The individual market gives people in these circumstances options so they don’t have to go without health coverage, but paying the full premium is a scary thought. Employers who have been forced to cut costs by eliminating group health insurance don’t have to leave employees high and dry. Many are offering some extra money on the side to help pay for individual plan premiums. When figuring out how much to offer, it helps to know what employees would be paying to make sure it’s going to make a difference.
The cost of health insurance by state
To help, we compiled national- and state-level data on individual health insurance premiums for the lowest-cost silver plan—the standard by which the IRS determines affordability and premium tax credits—from the past three years into a chart.
Want to see the trend in your state? View the entire list with all 50 states and D.C. in our cost of health insurance by state chart.
The national average for premiums dropped from $456 in 2018 to $442 in 2020. Thirty states also saw premiums decrease in that period. Colorado and Minnesota had the largest reductions at more than 20%. At the other end of the spectrum, Washington, D.C. and Vermont had the largest increases, with each rising more than 27%.
In addition to one of the largest premium decreases, Minnesota also has the lowest premiums in the nation at $294. Compare that to Wyoming who has the most expensive premiums at $875—more than $175 greater than the second most expensive state and almost 3x the cost in Minnesota.
How to offer health benefits during an economic slump
Once you’ve found the premium cost in your state and decided on an amount to give employees, the next step is deciding how to actually give that money to them. Wage increases and stipends, while simple, are also taxable. If you want your employees to be able to use the full allowance, you need a tax-free option.
That’s where health reimbursement arrangements (HRAs) come in. HRAs allow you to offer a tax-free health benefit while giving employees the freedom to choose a health insurance plan that gives them exactly what they need. You still get all the tax benefits of a traditional group plan while gaining the ability to define a per-employee allowance that fits within your budget.
See how much employers offered employees with an HRA last year
Conclusion
COVID-19 is causing many to lose their group health insurance plans. Fortunately, the individual market gives people a good option to keep coverage, and an HRA allows employers to help where they can with tax-free reimbursement of premiums and medical expenses.
For more information on HRAs, we did a side-by-side comparison of every HRA we offer that breaks it all down for you.
