Choice Stories

November 22, 2021

What You Can Expect to Pay for Employees’ Health Insurance in 2022

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.

Your Beginner's Guide to Choosing a Small Business Employee Benefits Program

Do you need help choosing the right health benefits for your employees?
This guide can help!