Small Group Health Insurance Rates: What You Should Know
Whether you are considering health insurance for your employees for the first time, or planning to renew, rates are an important factor in the decision-making process. Here’s a look at what industry experts are forecasting for Small Group health insurance rates in 2019.
Annual Premiums on the Rise
In the fourth quarter of last year, CBS MoneyWatch reported employees should expect to see more of the same when it comes to health insurance in 2019 – more cost sharing in the form of increased premiums and higher deductibles. The Kaiser Family Foundation said in its 2018 Health Benefits Survey that annual family premiums rose for the eighth straight year. Since 2008, average family premiums have jumped 55 percent. That’s twice as fast as employees’ earnings and three times the rate of inflation.
More than a quarter of employees with employer-sponsored coverage have a plan with a deductible of $2,000 or more, up from 22 percent in 2017 and 15 percent in 2013. For companies with fewer than 200 employees, 42 percent have a $2,000 (or higher) annual plan deductible.
California Rates Also Increasing
California’s public health insurance exchange, Covered California, announced in the run-up to the individual 2019 Affordable Care Act (ACA) enrollment period that rates for 2019 increased an average of 8.7 percent statewide. In most parts of Southern California, the increase is nine percent, although Monterey, San Benito, and Santa Cruz counties face the highest increases: 16 percent on average. That compares to a 12.5 average increase statewide in 2018 and greater increases in other parts of the country – both for 2018 and this year.
What Does This Mean for You?
Your employees’ health insurance costs are influenced by a variety of factors:
- The number of employees at your business
- Whether dependent coverage is offered (and whether you pay for it or share the costs with your employees)
- Your plan design(s) – HMO, PPO, EPO, etc.
- Your selected ACA metal tier(s) – Bronze, Silver, Gold, or Platinum (or a combination)
- Employee and dependent ages
- Employees’ home ZIP Codes
The best way to control your costs is by choosing coverage that offers Defined Contribution, which allows you to choose the amount you want to contribute to your employees’ health insurance costs. You can select a Fixed Percentage (50% to 100%) of a specific plan and/or benefit, or you can choose a Fixed Dollar Amount for each employee. Each employee must receive the same amount.
From there, your employees apply your contribution to whichever health plan and benefits they prefer. If an employee selects a plan that costs more than your contribution, he or she simply pays the difference.
Other Money-Saving Tips
In the past, employers looking to reduce costs could raise employee deductibles or offer less-generous plans. However, for 2019, less than half are planning to make similar changes. In today’s talent marketplace, businesses need to offer competitive benefits packages in order to attract and keep their best employees.
As reported by the Society for Human Resources Management (SHRM), a Mercer study found more organizations are open to adopting new technology to manage medical expenses. One common strategy includes targeting specific health problems like diabetes with coaching and interactive glucose monitoring devices that transmit health data directly to a health care provider. Other strategies include tools to help employees match their health plan to their specific health needs, and using predictive analysis to identify opportunities to improve health plan performance.
A Health Savings Account (HSA) can also help employees with a High Deductible Health Plan. Funds in the HSA can go toward co-pays, co-insurance, and other out-of-pocket amounts. In 2019, the HSA limit is $3,500 for an individual and $7,000 for a family with a qualifying health plan (with a deductible of at least $1,350 for an individual or $2,700 for a family). There is no time limit on the use of HSA funds and they grow tax-free until withdrawn for eligible expenses, even if that’s during retirement.
More employers with fewer than 50 employees are now offering a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA), which was created by Congress in 2016 as part of the 21st Century Cures Act. A QSEHRA allows employers to offer a monthly tax-free allowance to employees to purchase individual health insurance or use for qualified medical expenses. Go here to read an Accounting Today article concerning QSEHRAs.
Get Help from an Expert
As you navigate the complexities of your employees’ health insurance, it helps to speak with an expert. An employee benefits agent can provide critical information on how to manage your expenses. Click here to connect with an agent in your area.