With the current situation of “informal” stagnation and rising fuel costs, just “managing things” is costing more. To add to this costly mix, a market for home sales and rents that haven’t seen a significant price drop yet means saving money is high on most people’s priority list.
Of course, business owners feel the brunt of the rising cost of living just as much as everyone else – and in some ways – more than that.
One way small business owners can save money is with their company’s group health insurance plan.
Stay healthy while saving money
There are, of course, a few key points to keep in mind:
- If you are a qualified small business owner, you can apply for small business health insurance at any time of the year.
- However, once you enroll in a small business health insurance plan, you can only make changes to your existing benefits with the same insurance company once a year.
Another factor to consider is the overall costs as an employer.
These and other employer expenses have continually increased over the past decade or so.
For example, the average annual premium for employer-sponsored family health coverage was $22,221 in 2021, a four percent increase from the previous year. From last year, workers paid an average of $5,969 for the cost of their coverage.
In contrast, in 2011 employer-sponsored family health insurance premiums for small employers (3-199 workers) were only $14,595, while large employers (200 workers or more) averaged $15,544.
That’s an increase of more than 32 percent over ten years.
Employee Health Cover Numbers You Should Know
Here are some additional stats from the Kaiser Family Foundation (KF) 2021 Employer Health Benefits Survey:
- 58 percent of small businesses and 99 percent of large companies offer health benefits to at least some of their workers, for an overall supply rate of 59 percent.
- The average annual premium for covered workers in small businesses ($7,813) is similar to the average covered worker premiums at large companies ($7,709).
- The average annual premium for covered workers in a small business ($21,804) is similar to the average premium for covered workers in a large business ($22,389).
- Covered workers contribute on average 17 percent of individual coverage premiums and 28 percent of family coverage premiums in 2021.
- Average monthly worker contributions are $108 for individual coverage ($1,299/year) and $497 for family coverage ($5,969 annually).
- The average contribution amount for family coverage is higher for covered workers in small businesses (3-199 workers) than for covered workers in large businesses (200 or more workers) ($7,710 versus $5,269).
- The average annual employer contribution to insurance premiums overall in 2021 was $16,253.
While these numbers may seem a bit alarming to a small business owner who looks at rising costs in every other area of their business, there are ways to lower group health insurance costs.
Ways to save on healthcare costs
When considering the types of plans you are likely to offer your workers, the age and marital status of your employees matter.
If you have a variety of age groups in your workforce, offering a fully insured plan with multiple options can provide more stability, less risk, and more options.
For example, offering a highly deductible plan with a lower deductible included can be more expensive for younger and single workers as well as younger employees with families. This option allows each dependent to have a smaller individual deductible to meet, rather than one large deductible across the entire family.
On the other hand, if your workforce is generally healthy and younger, that usually means there are fewer claims. In this scenario, you may want to consider a level funded coverage. This will allow you to get an excellent price that depends on the health of your residents, and may be less expensive than the fully insured market.
As the Society for Human Resource Management (SHRM) explainAnd the
“With a tiered funded plan, the employer pays the health carrier the same monthly amount to cover the estimated cost of anticipated claims, a stop-loss premium covering health care costs in excess of a specified dollar amount, and the costs of administering the plan. If the total claims costs are higher or Less than expected, the carrier shall make adjustments at the end of the plan year in the form of a refund to the employer for lower claims or an increase in premium upon renewal of stop-loss insurance for higher claims.”
And as the KFF 2020 Employer Health Benefits Survey found, 16% of small businesses With 3 to 199 employees using the funded level health plans.
Additional strategies to save money on employee health care costs
Other possible options could include:
Submit an HSA compliant plan
A Health Savings Account (HSA) is a long-term account that an employee sets up to pay for their health care expenses. HSAs can only be used with specific HSA-compliant insurance plans, commonly known as HDHPs.
according to HealthCare.govAnd the
“A High Deductible Plan (HDHP) can be combined with a Health Savings Account (HSA), allowing you to pay certain medical expenses with federal tax-free money. For 2022, the IRS defines a High Deductible Health Plan as any plan with at least 1,400 deductibles. $1 for an individual or $2,800 for a family.
These types of plans can help employers save on premium contributions while still providing health coverage for their employees.
Providing preventative wellness
Wellness plans are becoming increasingly popular among business owners who want to keep their business insurance costs low. These services encourage employees to maintain and maintain good health.
For example, a preventive wellness plan might provide services like these for free or at low cost:
- flu shots
- cancer screenings
- Quit Smoking
- mental health services
Compare insurance providers
Each health insurance provider offers different plans. Some insurance companies increase their rates significantly on an annual basis, while others have more modest increases, or may reduce their rates over time. Shop before you decide on a plan.
Your small local resource for business health insurance
JC Lewis Insurance, a family business of longtime expert brokers, is located in Sonoma County. We offer health insurance plans from many of the leading health insurance companies licensed to offer insurance in California.
We are licensed and approved by each of these insurance companies to offer coverage to small group employers. In addition, JC Lewis Insurance Services Medicare, supplement and prescription drug plans for seniors.
When you’re shopping for health insurance for your employees, as well as vision and dental insurance for your employees — or just you and your family — you likely have many questions and concerns.
We understand that providing California health insurance options to your employees can be a daunting and complex task. You will need to find a balance between keeping costs low while offering the best options available to your workers.
At JC Lewis Insurance Services, we welcome your questions about insurance coverage and you can trust that we will help you find the right solution.