What’s the Average Cost for Group Health Insurance?
If you’re shopping for Group Health Insurance for your employees, you're likely wondering what you can expect to spend. You're not alone and the answer isn't a simple one. That's why we're taking a closer look at the cost of Group Health Insurance and the factors that influence it.
Your Group Health Insurance Cost Depends On:
- Your group size: Are you a Small Group or a Large Group? In California, “Small Group” applies to any employer-sponsored plan for groups with up to 100 employees. Large Groups in California have 101 or more employees. If your group is small, you’ll pay “table rates” for your employees based on their ages. If your group is large, your rates are negotiable and are based on your group’s claims experience as well as demographics.
- Your coverage preference: The plan (or plans) you select for your employees are available at different price points. HMO (Health Maintenance Organization) plans are generally the least expensive. PPO (Preferred Provider Organization) plans offer increased flexibility, which can come with additional costs. The lesser know EPO (Exclusive Provider Organization) plans are a hybrid model that combines the best of both worlds - increased flexibility without high-cost premiums. Added benefits, such as Dental or Vision, affect costs, too.
Some plans – like the CaliforniaChoice private multi-carrier, employee-choice exchange – offer added benefits like Dental, Vision, Chiropractic (with or without Acupuncture), and Life Insurance. Other benefits, such as discounted services, fitness and wellness, and more may be available at no added cost.
- Ages of employees: Health insurers still consider the age of each participant (employees and dependents). The employer’s ZIP Code also drives the cost, even if employees live in other ZIP Codes.
- Your contribution: With CaliforniaChoice, you decide how much you want to put toward your employees’ premiums. You can choose a Fixed Percentage (50% to 100%) of a specific plan or a Fixed Dollar Amount for each employee. (The amount has to be the same for all employees.)
- Network and Metal Tier choices: Other factors affecting costs are your choice of provider network and the ACA Metal Tier for your plan(s). You can choose from full and limited networks. That determines employees’ access to doctors, specialists, and hospitals. Four metal tiers are available in the employer-sponsored marketplace. They are Bronze, Silver, Gold, and Platinum. Each aligns with the benefits offered by plans in that tier, according to its actuarial value, which is the percentage of total costs for covered benefits.
The higher the metal tier, the higher the percentage paid by the plan for in-network-covered services. For example, a Bronze plan pays 60% for in-network covered services, with the employee paying the remaining 40%. A Silver plan pays 70%, with covered insureds paying 30%. A Gold plan pays 80% for in-network covered services, with insureds paying 20%. A Platinum plan pays 90% toward covered services, in-network, while the insured pays 10%. Depending on your plan and carrier selection, you may be able to offer employees a single ACA tier, multiple tiers, or all four tiers.
“De-Minimis” variations: Federal law allows states to broaden or reduce the federal ACA standard for actuarial values within metal tiers. While changed several times over the years, current law allows states to enhance or reduce a plan’s actuarial value within each metal tier by -4/+2%. For example, this means a Gold plan could have a 76% to 82% actuarial value instead of the standard 80%. Each plan varies.
Average Group Health Insurance Costs
According to the Kaiser Family Foundation (KFF) 2021 Employer Health Benefits Survey, nationally the average annual premium was:
- $7,739 for Single coverage and $22,221 for Family coverage.
- For Single coverage, the employer’s contribution was 83% of the total cost ($6,440), versus 72% ($16.253) for Family coverage.
- Premiums at small and large firms were comparable in 2021. They were $7,813 at small firms as compared to $7,709 at large firms for Single coverage.
- The numbers were $21,804 versus $22,389 at large groups for Family coverage.
Workers at small firms, on average, contribute a larger percentage for Family coverage than those at bigger firms, 24% as compared to 37%.
As you might expect, premiums for an HDHP (High Deductible Health Plan) with a savings option were the lowest. PPO premiums were on the higher side.
Nearly a third (29%) of covered employees at smaller firms enjoy the benefit of their employers paying the entire premium for Single coverage. That contrasts with just five percent of employees at larger firms.
For those employees with Family coverage, nearly one-third (31%) at small firms must contribute more than half of their Family coverage premium. That compares to just five percent of covered employees at large firms.
Based on plan type, the average employee and employer contributions for Single and Family coverage for 2021 were as follows:
KFF found PPOs attracted nearly half (46%) of insured employees in 2021. More than one-quarter (28%) enrolled in HDHPs with a saving option. Sixteen percent chose an HMO, nine percent enrolled in a Point of Service (POS) plan, and one percent chose an indemnity plan. This breakdown is similar to 2020 enrollments.
Self-Funded and Level-Funded Plans
Many firms, especially larger firms, choose to self-fund employee health coverage. KFF found nearly two-thirds (64%) of workers enrolled in self-funded plans. That includes 21% of covered employees at small firms and 82% covered at larger firms. Again, these numbers are similar to 2020.
Deductibles and Cost-Sharing
Eighty-five percent of covered workers have an annual deductible that must be paid before many services are covered under their health plan. The average deductible is $1,669 for Single coverage (across all plan types), with some variance for group size. At small firms, the average is $2,379 as compared to $1,397 at larger firms. The average Single plan deductible was up 13% in 2021, when compared to the prior five years – and up 68% over the last 10 years.
Copays also apply for most covered workers. These are due when visiting a doctor, being admitted to the hospital, or having outpatient surgery. Average copayments in 2021 were $25 for primary care and $42 for specialty care. The coinsurance amount for primary care was 19%, 20% for specialty care.
Nearly two-thirds (59%) of employers offered benefits in 2021 to at least some workers, although it varied by firm size. Among those with three to nine workers, less than half (49%) offered health coverage. In contrast, virtually all employers with 1,000 or more workers offer health coverage to at least some workers. KFF says that among employers that offered health coverage in 2021, 77% of employees choose to enroll.
Find Coverage for Your Group
If you're interested in comparing options for your employees, the best place to start is with a broker. Your broker can discuss the plans and coverage options available in your area. If you don’t already have an employee benefits broker, you can get a quote from one of our CalChoice preferred brokers today.