Updated June 20, 2019
A major finding of eHealth’s 2018 Small Business Health Insurance Report was that smaller groups signed up for group health insurance—group sizes as little as 3 or 4 people, which were not as common in previous years.
One reason for this shift in demographics in the small group health insurance market could be the rapidly increasing cost of individual plans. In other words, small businesses that wouldn’t normally provide health insurance for all employees are realizing that they can save on per-individual costs by opting for group plans that can cover everyone together under one policy.
Oftentimes, small group health insurance plans are less expensive per person than individual plans. According to eHealth’s report, the national average small business plan deductible was 31% lower than the average deductible on an individual plan. For small business coverage, average prices are as follows:
And for individual non-group coverage:
Keep in mind that each plan has its own terms and limitations, so be sure to check the official plan documents to understand how that specific plan works. This article is only for general education.
There are a few reasons why small group health insurance usually ends up costing less per person than individual plans.
There are, of course, different reasons why plans cost less or more, and cost will vary from plan to plan. Make sure to check the plan details before choosing to enroll in group health insurance, and make sure you understand all the costs and covered services.
In addition to being cheaper in the moment, it may be a relief for some people to know that in a very unstable market, the prices on small group health insurance plans have remained pretty similar for quite some time.
One thing that has remained consistent in the individual market: rising prices. Average premiums on individual plans increased 54 percent between 2015 and 2018 (from $286 in 2015 to $440 in 2018). Year after year, prices continue to rise, but you’ll find that this is not the case when shopping for small group plans.
From 2015 to 2018, average per-person premium coverage on group plans only increased by 5 percent.
The insight that very small groups who previously wouldn’t bother with group health insurance are starting to enroll in these plans, tells us that consumers are looking for affordable options to traditional individual health insurance. If you have a small business, it may be worth your time to look into small business health insurance to see if it could help you and your group members save on health insurance costs.
A licensed insurance broker can list the pros and cons of each model and help you develop a small group health insurance plan that is right for your small group. Always consult your tax and legal advisors to understand your specific tax and compliance situation. This article is for general information and not intended to provide any tax or legal advice.