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Maybe you’re in the market for the first time shopping for a health plan for your small business employees. Or, you’re looking again because you want to compare prices to be sure you’re getting the most value for your dollar. A great place to start is to talk with a broker.

An insurance broker can help you shop and compare local options. Using a broker’s services does not cost you money but could deliver significant savings because of their expertise.

How Much Does Employee Health Insurance Cost?

The 2021 Best Practices in Health Care Survey by Willis Towers Watson found employers expect a 5.2% increase in health plan costs in 2022. This represents an increase slightly lower than the 2021 projection, but it is sharply higher the actual 2020 increase of 2.1%.

The Society of Human Resource Management (SHRM) reports Willis Tower Watson found an average employer cost of $13,360 in 2021. That’s $1,113.33 per month in 2021, up from $1,041.75 in 2020.

Employee premium contributions in 2021 increased slightly to $3,331 annually ($277.58 monthly) in 2021, versus $3,269 per year ($272.42 per month) in 2020. Employees paid an additional $2,023 toward deductibles, co-pays, and co-insurance in 2021, according to findings by Aon.

On an “hour worked” basis, a September 2021 Bureau of Labor Statistics report found private industry employer costs for workers averaged $36.64 per hour worked in June 2021. That figure includes average wage and salary costs of $25.89 per hour worked and benefits costs of $10.76 per hour. The average health insurance benefits cost was $2.63 per hour worked, over seven percent of total compensation.

In contrast, state and local government compensation costs were 45% higher, and health insurance benefits costs were more than double: $6.10 per hour worked. Civilian worker compensation averaged $38.91 per hour; health insurance cost averaged $3.09 per hour worked.

How Much Do Employers Pay To Offer Health Insurance?

A Kaiser Family Foundation (KFF) survey in 2021 found these average annual premiums for employer-sponsored coverage across all plan types:

The average single and family premiums increased four percent over 2020.

Premiums for workers in small and large firms were similar: $7,813 for small groups for single coverage; $7,709 for large firms for single coverage. Family coverage premiums were $21,804 for small firms and $22,389 for large firms.

On average, insured employees contribute 17% to the premium cost for single coverage. Those with family plans contribute an average of 28% toward their premium. At small firms, covered workers’ contributions are higher for family coverage: 37% on average.

The KFF analysis found average 2021 worker contributions for single coverage were:

For family coverage, the average annual employee contributions were:

The KFF data for 2021 was released in November 2021.

If the previously mentioned 5.2 percent increase for 2022 holds true, premiums for all plans could top $8,125 for single coverage and $23,376 for family coverage next year.

What Affects Group Health Insurance Premiums?

There’s a lot that affects what you pay for health insurance, including things outside of your control. Investopedia says these factors can influence insurance costs:

Required Offering by ALEs

A major provision of the Affordable Care Act (ACA) is the mandate for Applicable Large Employers (ALEs). An ALE is an employer with at least 50 full-time employees (FTEs), including full-time equivalents. The mandate requires ALEs to offer Minimum Essential Coverage to full-time employees and eligible dependents.

If your business is not an ALE, you are not required to offer ACA-compliant health coverage. However, employers with fewer employees often offer benefits, including health insurance. It can help them recruit and retain their best employees. Benefits can be an employer differentiator in a competitive talent marketplace.  

As an ALE, if you do not offer health insurance to eligible employees and dependents, you are subject to a penalty. The “trigger” would be if an employee receives a federal subsidy to get coverage.  The employee would need to apply through the Covered California public health insurance exchange.

An even larger penalty applies if the coverage you offer is not affordable to employees or does not provide minimum value. In 2022, “affordable” means the employee’s cost does not exceed 9.61% of household income for the lowest-cost, self-only coverage option.

A plan passes the ACA minimum value test if it includes certain coverage and pays at least 60% of the total cost of medical services. That is equivalent of a Bronze tier plan or better. ACA plans are available in four metal tiers: Bronze, Silver, Gold, and Platinum. Each tier offers a different level of support for covered services, ranging from 60% to 90%.

Control Health Insurance Costs with CaliforniaChoice

In addition to employee choice, one of the things that employers love about CaliforniaChoice is the ability you have to control your costs.

What Percentage of Health Insurance Do Employers Pay?

You decide what you want to contribute to your employees’ health insurance. You can choose a Fixed Percentage (50% to 100%) of a specific plan and/or benefits. Or, you can select a Fixed Dollar Amount for each employee. Your employees can then apply your generous contribution to the health plan and benefits they like best.

You or an employee might pick choose from several options:

With CaliforniaChoice, it’s the employee’s choice. If the plan an employee prefers costs more than your contribution, the employee pays the difference. It’s that simple.

CaliforniaChoice offers greater access. You can choose from more doctors, specialists, and hospitals than any other health benefit option in the state. Our provider networks include 80,000+ doctors and 400+ hospitals.

Talk With a Broker to Learn More

Ask your employee benefits broker for a customized quote for your business. You can learn more about the advantages offered by CaliforniaChoice. If you don’t already have a broker, we can help you find one here.

The decision to offer group health insurance to employees is not always an easy one for a business owner or manager to make. While most employers want to do the right thing and make health coverage available to workers, the cost can sometimes be an obstacle.

Even if your business is an Applicable Large Employer (ALE), your workers may not fully value it. (Find out more about ALEs on the IRS website.) What can you tell them to help employees appreciate their group health coverage?

Group Vs. Individual Coverage

If your employees were insured before under a group health plan, they make take health insurance benefits for granted. That’s not unusual, although some are reconsidering their health insurance options in response to COVID-19.

What’s important for you and them to know is not every group health plan is the same. If you offer the CaliforniaChoice private exchange, employees get more choice. You also gain the ability to control your annual benefits costs.

Unlike coverage through a single insurer, CaliforniaChoice offers:

You control how much you want to put toward employees’ benefits. You can choose a fixed dollar amount or a fixed percentage contribution. Plus, when you choose coverage from CaliforniaChoice, you’re able to lock in your cost for 12 months.

Group health insurance offers many advantages over individual health:

Value-Added Benefits

Coverage offered through an employer may also come with “extras” at no added cost to the employee – or your business. For example, CaliforniaChoice offers two programs that offer many benefits to your business and your employees.

The CaliforniaChoice Business Solutions Suite includes:

The CaliforniaChoice Member Value Suite includes discounts on a wide range of things that you and your employees want:

Learn More from a Broker

There are so many benefits to CaliforniaChoice – and to group health insurance in general. Be sure your employees understand the advantages. To learn more about how CaliforniaChoice can expand employees’ options and save money for your business, talk with a broker.

It may surprise you to learn that a broker’s services do not cost you anything. In fact, using a benefits professional could save you money. That’s because an experienced broker has the expertise to help you find coverage to fit your employees – and your budget. If you don’t already have a broker, we can help you find one.

It’s November, when many of us reflect on the things we’re thankful for. When it comes to health insurance coverage, CaliforniaChoice members are thankful for the freedom and flexibility our program offers.

1. More Choices

CaliforniaChoice offers more health plan choices than any other program in California. Members can choose from 110+  options, including PPOs, EPOs, and HMOs. Participating health plans include Anthem Blue Cross, Cigna + Oscar, Health Net, Kaiser Permanente, Sharp Health Plan, Sutter Health Plus, UnitedHealthcare, and Western Health Advantage.

You and your employees also have access to plans in every Affordable Care Act (ACA) metal tier. You can choose Bronze, Silver, Gold, and Platinum. Plus, it’s easy to shop and compare plans. The Online Plan Comparison Tool shows you what plans include your preferred doctors and hospitals. The Rx Search tool lets you find out what plans include your needed prescription drugs.

2. Employer Cost Control

Controlling costs is also important for small business owners. CaliforniaChoice makes it easy for you to work within your budget. With our program, you decide how much you want to contribute to your employees’ health insurance premiums. You can select a Fixed Percentage Amount (50% to 100%) toward a specific benefit. Or, you can choose a Fixed Dollar Amount, for each employee. Keep in mind, your contribution has to be the same for all employees.

Employees then use your contribution toward the cost of the plans they prefer. If they pick plans that cost more than your contribution, they simply pay the difference.

The amount you choose to put toward employees’ benefits is locked-in for 12 months. That simplifies your budgeting. If you want to, you have the flexibility to change your contribution at renewal next year.

3. Value-Added Extras

Better budget control and more options are not the only things that set CaliforniaChoice apart. Members are thankful for the free member perks as well.

CaliforniaChoice offers valuable extra benefits in the Business Solutions Suite and Member Value Suite. These include:

Talk with a Broker to Learn More

Your health insurance broker can provide you with more information about why more than 25,000 business have coverage through CaliforniaChoice . Ask about a custom quote for your employees today. If you don’t have a broker, we make it easy to search for one here.

A new calendar year often means a new benefits year for employers. Several health plans are introducing new options and benefits for 2022. Some government-set limits are changing, too. Here’s a look of what you need to know for the coming year.

HDHP and HSA Limits

Two things that often change annually are limits established by the Internal Revenue Service (IRS). These include High Deductible Health Plan (HDHP) maximum out-of-pocket amounts and Health Savings Account (HSA) contributions. Below is a comparison of 2021 and 2022 amounts.

Contribution and Out-of-Pocket Limits for HSAs and HDHPs
  2022 2021 Change
HSA contribution limit (employer + employee) Self-only: $3,650 Family: $7,300 Self-only: $3,600 Family: $7,200 Self-only: +$50 Family: +$100
HDHP maximum out-of-pocket amounts (deductibles, copayments, and other amounts – but not premiums) Self-only: $7,050 Family: $14,100 Self-only: $7,000 Family: $14,000 Self-only: +$50 Family: +$100
HDHP minimum deductibles Self-only: $1,400 Family: $2,800 Self-only: $1,400 Family: $2,800 No change for either Self-only or Family
Source: IRS, as reported by SHRM

The HSA catch-up contribution for individuals age 55 and older is the same in 2021 and 2022: $1,000.

Affordable Care Act (ACA) Compliant Plans

The U.S. Department of Health & Human Services (HHS) annually sets out-of-pocket or cost-sharing limits. The table below shows the new limits for 2022, and the current 2021 limits.

Maximum out-of-pocket for ACA compliant plans
2022 2021 Change
Self-only: $8,700 Self-only: $8,550 +$150
Family: $17,400 Family: $17,100 +$300

 

Affordability and Minimum Value

Under the ACA employer mandate, Applicable Large Employers (ALEs) must provide health insurance to full-time employees. If they do not, they face an IRS penalty. Generally, an ALE is an employer with 50 or more full-time or full-time-equivalent employees on average during the previous calendar year.

Offering coverage is not enough, though. Insurance must provide minimum value (Bronze tier or better) and it must be affordable to employees. If you are an ALE and one of your full-time employees goes to the state public exchange to purchase coverage utilizing a premium tax credit, you are subject to noncompliance penalties under IRS Sections 4980H(a) and 4980h(b).

If you are not sure whether your organization is an ALE, CaliforniaChoice offers useful ACA calculators on its website. There’s an ACA Full-Time Equivalent Calculator, an ACA Penalties Calculator, and an ACA Safe Harbor Calculator. Calculators to help you determine your cost per hire, employee turnover, and absenteeism costs are also available.

For plan years starting in 2022, the adjusted contribution percentage for affordability is 9.61%. This marks a decline from 9.83% in 2021.

That means the employee’s share of the premium for the lowest-cost, self-only coverage option cannot exceed 9.61% of the employee’s rate of pay, W2 Box 1 income, or the Federal Poverty Level (FPL).

The Society for Human Resource Management (SHRM) notes this decline could mean what was affordable in 2021 may not be affordable in 2022. If that the case, the employer’s contribution would have to increase even if everything else stays the same as far as benefits and costs.

According to SHRM, if a business offers a 2022 health plan that costs employees no more than $103.14 each month (for employee-only coverage), it will automatically meet the affordability standard under the FPL safe harbor.

If an employer uses the FPL safe harbor, it must be used for all employees It cannot use Rate of Pay for some and FPL for others. In 2021, that FPL safe harbor amount was $104.53 per month.

Surprise Billing

Beyond plan, contribution, and affordability changes, there’s a big “surprise billing” change in 2022. The federal government has issued new regulations that restrict excessive out-of-pocket costs for consumers from surprise and balance billing for out-of-network services.

Surprise and balance billing happens when individuals receive emergency or non-emergency care from health care providers that are outside of their health plan’s network.

Patients frequently go to a hospital because it accepts their insurance, but some physicians and specialists may not be a part of the insurer’s provider network.

Balance billing occurs when a provider bills the patient for something not covered by insurance. Medicare and Medicaid prohibit balance billing. However, it is often standard practice for private insurance.

The New York Times reported in September 2021 that as many as one in five emergency room visits results in a surprise medical bill.

The new federal rule that takes effect January 1, 2022:

There has been some pushback from hospitals and other providers about the new rule’s arbitration provisions. However, major changes to the measure are not expected before its 2022 implementation.

Talk with a Broker to Learn More

Your insurance broker can provide more information about what’s ahead for 2022. A broker can also help you find health coverage for your employees that fits your company budget and offers more employee choice. If you don’t have a current broker, you can search for one here.