How Much Does Small Business Health Insurance Cost?Back
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Providing employer-sponsored, group health insurance is one of the top benefits a small business can provide for employees. It’s also one of the costliest expenditures. Fringe Benefit Analysts is committed to helping small business owners navigate the health insurance benefits landscape and decipher just how much it costs for small business health insurance.
First—What is Group Health Insurance?
Group health insurance, also commonly referred to as employer-sponsored health insurance, helps employees pay for healthcare expenses. Small businesses may enroll in a group health insurance plan any time and then offer benefits to eligible employees. Group health insurance plans typically reduce the cost of health insurance, which can be beneficial for both small businesses and their employees.
Average Cost of Small Business Health Insurance
In 2020, the average, annual premiums for employer-sponsored health insurance were $7,470 for single coverage and $21,342 for family coverage, according to a Kaiser Family Foundation survey. Since group health insurance is employer-sponsored, small businesses often ask employees to share in the costs. Most employees make a contribution toward the cost of their healthcare coverage premium, averaging about 17% for single coverage and 27% for families last year.
How much health insurance costs your small business is dependent upon how much of the employee premium you opt to cover. The more an employee pays out-of-pocket, the less cost to your business. Other small business health insurance cost considerations include minimum participation, cost share and administrative costs.
Are Employers Required to Offer Small Business Health Insurance?
The ACA (Affordable Care Act) does not currently require employers with fewer than 50 full-time employees to provide group health insurance coverage. Businesses with 50 or more full-time employees must provide affordable, minimum essential health insurance.
Benefits of Offering Healthcare to Employees
Both businesses and individuals benefit from offering and participating in a group health insurance plan. For employees, group insurance is typically more affordable than an individual health insurance policy. Small businesses may qualify for tax credits and deductions.
Offering health insurance is also critical to attracting and retaining top talent. The Society for Human Resource Management (SHRM) estimates the average replacement cost of a salaried employee is equivalent to six to nine months’ salary. When small businesses think of health insurance as an investment, rather than simply an expense, the result can be higher-quality, longer-lasting employees. The happier employees are, the more productive they are, and that benefits your bottom line.
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Types of Healthcare Plans
The two most common health insurance plans are HMOs and PPOs. An HMO (Health Maintenance Organization) is usually easier on the pockets, but limits choice of doctors to a smaller network. A PPO (Preferred Provider Organization) can be pricier but usually provides coverage to a wider range of physicians and specialists. Other types of health insurance include POS (Point-of-Service) and EPO (Exclusive Provider Organization). The team at Fringe Benefit Analysts can help you find the most effective plan for your small business.
Choosing the Right Insurance
Choosing the right insurance products to meet healthcare and fiscal needs is crucial. That’s why it’s important to navigate the waters with a qualified and experienced employee benefits consultant. Fringe Benefit Analysts provides the personalized attention and professional experience to guide you and your employees through the process of choosing the best health insurance options. Contact one of our dedicated professionals in any of our six Utah locations today.