What Is the Average Cost of Small Group Health Insurance?

Small Business

What Is the Average Cost of Small Group Health Insurance?

Updated on November 01, 2019


Updated June 20, 2019

“How can I get affordable health coverage?” With rising premiums and an uncertain policy landscape, workers and employers alike struggle to find insurance they can afford.

As a small business owner, you may have the advantage of qualifying to get small group health insurance, which is often cheaper than individual health insurance. If you’ve decided that you want to enroll in a small group health insurance plan, you may be wondering how much this will cost for you. Although plan prices are different based on the benefits and services they come with, eHealth’s 2018 small business health insurance report found some numbers that may help you get a better understanding of prices in the small group health insurance market.

What are the costs associated with a small group health insurance plan?

Like most individual plans, the cost of a small group health insurance plan usually comes with a number of different payments, such as deductibles and premiums.

  • A premium is a regular payment, usually made once a month, that policyholders must pay every month to remain enrolled in health insurance.
  • A deductible is a sum of money that a policyholder must pay out of pocket before his or her insurance will kick in and start contributing to medical costs.

To illustrate these concepts, imagine that your health insurance has a premium of $400 a month and a deductible of $1000. That means you have to pay $400 each month to keep your insurance. It also means that if you generate $2500 in medical bills one year, you will have to pay the first $1000 before the insurance company starts paying its share. After that, you’ll typically pay a copayment or coinsurance for each doctor visit. You’ll generally pay a small portion of the remaining $1500 of covered services.

What is the average cost of small business health insurance?

According to a 2018 eHealth study, the average premium for small group health insurance was $409 per month in 2018, compared to $440 for an individual plan. In terms of deductibles, small group health plans had an average deductible of $3140 per year, compared to $4578 for individual plans.

Why is the average cost of small business health insurance lower than that of individual coverage? This is, in part, due to risk pool advantage, which means that the larger the group, the more spread out the costs are to provide coverage for medical care. The Small Business Administration explains this benefit of group health insurance plans as follows: the larger the group of people, the more monthly payments there are coming in, and the more money the insurance company has for when one of the enrolled members needs care.

How much does each person pay for small group health insurance?

Although the cost of small group health insurance is usually lower overall, the specific financial details of a small group health insurance plan vary based on a number of factors. Thus when calculating the cost of small business health insurance for your company, take into account:

  • Employer contributions– In a small group health insurance plan, employers and employees typically split the cost of small business health insurance between them. For a plan that covers their entire family, the average worker has to contribute $6814 a year in premiums, with the employer covering the rest, according to the Society for Human Resource Management.
  • Specific coverage– The cost of small business health insurance may increase depending on what is covered. In a hazardous industry, for example, employers may purchase small group health insurance plans that cover certain risk-related illnesses and injuries. This can push up the total cost of small business health insurance, whether for the employer, for their workers, or for both.
  • Tax credits– Under the Affordable Care Act, employers who have fewer than 25 employees, who pay average wages of $52,000 or less, or who cover at least half of their employees’ premiums may be eligible for tax credits for their small group health insurance plans. These can lower the cost of small business health insurance.

This article is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.

eHealth is committed to helping employers of all stripes get affordable small group health insurance plans. For more information or to find the plan that’s right for you, visit our website today.

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