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:
- $7,739 for single coverage
- $22,221 for family coverage
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:
- $1,183 for a Point of Service (POS) plan
- $1,204 for an HMO
- $1,242 for HDHP coverage
- $1,389 for a PPO
For family coverage, the average annual employee contributions were:
- $5,129 for HDHP coverage
- $5,254 for an HMO
- $6,428 for a PPO
- $7,512 a Point of Service (POS) plan
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:
- State and federal laws, including guidelines of what must be covered
- Type of insurance (group or individual coverage)
- Income level (and potential eligibility for a federal or state subsidy)
- Employer size (larger companies sometimes pay less for coverage)
- State of residence (your state or county may affect your premium – and how many coverage options you have available to you)
- Type of community (urban vs. rural)
- Plan type (Preferred Provider Organization vs. Health Maintenance Organization or Exclusive Provider Organization coverage)
- Age and tobacco use (coverage for older individuals and smokers is more expensive)
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:
- An HMO (Health Maintenance Organization) plan from Anthem Blue Cross, Health Net, Kaiser Permanente, UnitedHealthcare, or a regional plan like Sharp Health Plan, Sutter Health Plus, or Western Health Advantage
- A PPO (Preferred Provider Organization plan from Anthem
- An EPO (Exclusive Provider Organization) plan from Cigna + Oscar or Anthem
- An HSA (Health Saving Account) qualified plan
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:
- Dozens of HMO, PPO, EPO, and HSA-qualified options from eight health plans
- Coverage from Anthem Blue Cross, Cigna + Oscar, Kaiser Permanente, Health Net, and UnitedHealthcare
- Coverage from regional health plans like Sharp Health Plan, Sutter Health Plus, and Western Health Advantage
- Access to 80,000+ doctors and 400+ hospitals – more than any other program in California.
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:
- Employees typically only pay a portion of the cost of group coverage
- With an individual or family plan, employees pay 100% of the premium on their own
- Employees may also have more options available through their employer than on their own
- Rather than a single plan option, group coverage may include a range: HMOs, PPOs, EPOs, Point of Service, High Deductible Health Plans, and Health Savings Account-qualified plans
- Employee premiums are paid through automated payroll deductions
- With group coverage, there are no payment due dates to worry about, no checks to write, and no required postage
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:
- Online HR Support Center: 24/7 human resources support from Mineral. The Center offers downloadable and customizable handbooks, company policies, job descriptions, and forms. You also get summaries of state and federal laws that could affect your business and your workers, a glossary of HR terms and definitions, and more.
- Flexible Spending Accounts (FSAs) for employees: Givesemployees the opportunity to pay for eligible health care-related expenses with pre-tax dollars. That helps employees save on taxes and lowers your required FICA contributions. (For groups with 15+ employees)
- Premium Only Plans (POPs) for employees: A Section 125/Premium Only Plan is available, too. Employees can pay their share of Medical and Dental premiums with pre-tax dollars. Employees take home more of their paychecks, and your business saves on FICA and Workers’ Comp with lower taxable payroll. (CaliforniaChoice covers the initial set-up cost.)
- Cal-COBRA or Federal COBRA billing services: Your business may be eligible for free Cal-COBRA or federal COBRA services. Each applies when an eligible enrollee loses coverage due to a qualifying life event. (State or federal services depend on group size)
The CaliforniaChoice Member Value Suite includes discounts on a wide range of things that you and your employees want:
- Entertainment: Cal-Perks® offers reduced-cost tickets to movies, theme parks, water parks, sporting events, museums, travel, food delivery, gifts, and more.
- Health Products: Members can save up to 57% on Garmin, Vitamix, and Fitbit products and get a $25 a month fitness membership.
- Dental Care: Take advantage of reduced fees on Dental care at thousands of Dentegra® Smile Club dentists nationwide.
- Vision Care: Get frame, lenses, and eye exam discounts at participating retailers nationwide,
- Hearing Care: Save up to 50% on brand-name hearing aids – and get discounted batteries, too.
- Prescription Drugs: Save on medications with the California Rx Card. It could reduce your out-of-pocket to less than your Rx co-pay with insurance.
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:
- Discount Dental: The Dentegra® Smile Club offers instant savings, no waiting period, and no claim forms. It includes a nationwide network of more than 20,000 providers.
- Discount Vision Care: The EyeMed Vision One plan offers discounts on frames, lenses, and eye examinations. Visit a LensCrafters, Pearle Vision, or Target Optical store or independent practices.
- Discount Hearing: The EPIC Hearing program offers discounts of up to 50% on hearing-related products, and hearing tests.
- HR Support: Get online human resources support from Mineral (formerly Mammoth HR/ThinkHR). Download customizable forms and get updates on regulations that could affect your business and employees.
- Active&Fit Direct®: Access 4,000+ digital workout videos, lifestyle coaching, and classes from world-class instructors. Get a fitness center membership at just $25 per month at 10,000 participating centers nationwide. (Taxes may apply.)
- Cal Perks: This employee discount program delivers savings on the things you and your employees want. Choose movie, theme park, or sporting event tickets, travel, food delivery, flowers and gifts, online education, and more.
- Prescription Drug Discounts: The California Rx Card offers up to 80% savings on prescription drugs. Includes more than 68,000 pharmacies nationwide, including CVS, Albertsons, Safeway, Vons, Kroger, Ralphs, Rite Aid, Walgreens, and others. Your out-of-pocket cost when using the card could be less than your copay with health insurance.
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|
|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|
|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:
- Bans surprise billing for emergency services. (Emergency services must be treated on an in-network basis, without requirements for prior authorization.)
- Bans high out-of-network cost sharing for emergency and some non-emergency services. (Patient cost sharing, such as co-insurance or a deductible, cannot be higher than if services were in-network, and any coinsurance or deductible must be based on in-network provider rates.)
- Bans out-of-network charges for ancillary care (like an anesthesiologist or assistant surgeon) at an in-network facility in all circumstances.
- Bans other out-of-network charges without advance notice. (Health care providers and facilities must provide patients with a plain-language consumer notice explaining that patient consent is required to receive care on an out-of-network basis before that provider can bill at a higher out-of-network rate.)
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.