Choice Stories

January 27, 2022

Understanding The Cost of Employee Health Insurance For Employers

Health insurance is among the most popular of employee benefits. The MetLife’s Employee Benefits Trends Study in 2021 found 85% of employees consider health insurance a “must have” and another 10% think it is “nice to have.” Only 4% see health insurance as not needed. That makes health insurance the most highly valued of 17 benefits asked about in MetLife’s most recent annual survey.

The truth is, if you’re a business owner or manager considering employee health insurance, most of your employees will expect it. So, the natural question is, “what will I pay for employee health coverage?” And, what can your employees expect to pay for their deductibles, co-pays, and other out-of-pocket costs? We'll break it down for you.

So, How Much Does Health Insurance Cost an Employer?

The 2021 Kaiser Family Foundation (KFF) survey on employer-sponsored coverage came out in November. It found the national average premium across all plan types is $7,739 for single coverage and $22,221 for family coverage.

Premiums in small and large firms were similar: $7,813 for single coverage at small groups and $7,709 for single coverage at larger firms. Family coverage premiums in 2021 were $21,804 for small firms and $22,389 for large firms.

The average single and family premiums increased four percent in 2021 and forecasts suggest another mid-single-digit increase in 2022.

Workers’ Share of the Costs

On average, insured employees contributed 17% to the cost for single coverage in 2021, according to KFF data. Those with family plans contributed an average of 28% toward their premiums. For those working at small firms, covered workers’ contributions were 37% on average.

Of course, the type of coverage selected does affect premiums. Point-of-service (POS) plans had the lowest average ($1,183) for single coverage in 2021, followed by HMOs ($1,204), High Deductible Health Plans ($1,242), and PPOs ($1,389).

For family coverage, the 2021 average annual employee contributions were $5,129 for HDHP coverage, $5,254 for an HMO, $6,428 for a PPO, and $7,512 for a POS plan.

If the forecast 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 this year.

Costs Beyond Premium

Beyond what employees contribute toward their total health insurance premium, they have other out-of-pocket costs. These vary based on the medical plans they select.  

With CaliforniaChoice, calendar year deductibles range from none (on multiple Platinum HMO and Gold HMO plans) to more than $15,000 for a Bronze HMO family plan. Co-pays or co-insurance amounts may apply to some services, too, depending on the carrier and plan.

One PPO option offered in the Bronze tier through CaliforniaChoice has an out-of-network calendar year deductible exceeding $20,000. (This is a combined amount that applies to Medical/Rx/Pediatric Dental, and also applies to the plan’s annual Out-of-Pocket Maximum).

One big advantage of CaliforniaChoice is that employees are able to find coverage that matches their individual or family health care needs and budget.

Control Your Business Costs

CaliforniaChoice was developed more than a quarter-century ago with two goals: increasing choice for employees and helping employers control their costs.

CaliforniaChoice gives businesses and employees access to eight different health plans and dozens of coverage options, including HMOs, PPOs, and EPOs (Exclusive Provider Organizations).

Beyond that, CaliforniaChoice can help you control your costs. That’s because you choose how much 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 then apply your contribution to the health plans and benefits they like best. If they choose a plan that costs more than you contribute, the employees pay the difference.

One employee might select an HMO 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. Another might choose a PPO from Anthem. A third might select an EPO plan from Cigna + Oscar or Anthem. Others might select HSA-qualified plans from several carriers.

With CaliforniaChoice, you and your employees have access to 80,000+ doctors and specialists, and 400+ hospitals – more than any other health benefit option in the state.

Talk With a Broker to Learn More

An insurance broker can help you compare options in your community. Best of all, using a broker does not cost you money. What you pay is the same, whether you use a broker or not. And, using a broker could actually deliver savings.

Ask for a customized quote for your business and your employees. You’ll learn more about all of the added advantages offered by CaliforniaChoice.

If you don’t already have a broker, you can search for one here.

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

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