With the current state of “unofficial” recession and rising fuel costs, just “getting by” is costing more. And to add to that costly mix, a housing sales and rental market that has yet to significantly see pricing decreases mean that saving money is high on most people’s the list of priorities.
Of course, business owners feel the brunt of a rising cost of living as much as anyone and – in some respects – more so.
One of the ways small business owners can save money is on their company’s group health insurance plan.
STAYING HEALTHY WHILE SAVING MONEY
There are, of course, a few fundamental points to keep in mind:
- If you’re a qualifying small business owner, you can apply for small business health insurance at any time of year.
- However, once you’ve enrolled in a small business health insurance plan, you can only make changes to your current benefits with the same insurer once per year.
Another factor to consider is your overall costs as an employer.
These and other employer expenses have continually increased over the last decade or so.
For example, the average annual premiums for employer-sponsored family health coverage reached $22,221 in 2021, a four percent increase from the previous year. from last year, with workers on average paying $5,969 toward the cost of their coverage.
In contrast, in 2011, employer-sponsored family health coverage premiums at a small employers (3-199 workers) was just $14,595, while those at large employers (200 or more workers) average $15,544.
This is an increase of more than 32 percent over ten years.
Employee Health Coverage Numbers You Should Know
Here are some additional statistics from the Kaiser Family Foundation (KF) 2021 Employer Health Benefits Survey:
- 58 percent of small firms and 99 percent of large firms offer health benefits to at least some of their workers, with an overall offer rate of 59 percent.
- The average annual premium for single coverage for covered workers in small firms ($7,813) is similar to the average premium for covered workers in large firms ($7,709).
- The average annual premium for family coverage for covered workers in small firms ($21,804) is similar to the average premium for covered workers in large firms ($22,389).
- Covered workers on average contribute 17 percent of the premium for single coverage and 28 percent of the premium for family coverage in 2021.
- The average monthly worker contributions are $108 for single coverage ($1,299 annually) and $497 for family coverage ($5,969 annually).
- The average contribution amount for family coverage is higher for covered workers in small firms (3-199 workers) than for covered workers in large firms (200 or more workers) ($7,710 vs. $5,269).
- Average annual employer contribution to premiums overall in 2021 was $16,253.
While these numbers may seem a bit distressing to a small employer looking at rising costs in every other area of his or her business, there are ways to lower the costs of group health insurance.
WAYS TO SAVE ON HEALTH CARE COSTS
When considering the types of plans you can potentially offer your workers, the age and marital status of your employees matters.
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 greater choice.
For example, offering a high-deductible plan with a lower embedded deductible can also be more affordable for younger, single workers as well as younger employees with families. This option allows for each dependent to have a smaller individual deductible to meet, rather than one huge deductible across the entire family.
On the other, if your workforce is generally healthy and younger, this typically means there are fewer claims. In this scenario, you may want to consider level-funded coverage. This will allow you to receive a premium rate that’s based on how healthy your population is, and it may be less expensive than the fully insured market.
As the the Society for Human Resource Management, (SHRM) explains,
“With a level-funded plan, an employer pays a health carrier the same monthly amount to cover the estimated cost for expected claims, the premium for stop-loss insurance that covers health care costs over a set dollar amount, and plan administration costs. If total claims costs are higher or lower than expected, the carrier makes adjustments at the end of the plan year in the form of a refund to the employer for lower claims or a premium increase on the stop-loss insurance renewal for higher claims.”
And as the KFF 2020 Employer Health Benefits Survey found, 16 percent of small firms with 3 to 199 employees used level-funded health plans.
Additional Strategies for Saving Money on Employee Health Care Costs
Other possible options can include the following:
Offer an HSA-Compatible Plan
A Health Savings Account (HSA) is a long-term account an employee sets up to pay for their healthcare expenses. HSAs can only be used with specific HSA-compatible insurance plans, typically known as HDHPs.
According to HealthCare.gov,
“A high deductible plan (HDHP) can be combined with a health savings account (HSA), allowing you to pay for certain medical expenses with money free from federal taxes. For 2022, the IRS defines a high deductible health plan as any plan with a deductible of at least $1,400 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.
Provide Preventative Wellness
Wellness plans are becoming increasingly popular with business owners who want to keep their company insurance costs low. These services encourage employees to get and stay healthy.
For example, a preventative wellness plan may provide services like these for free or at a low cost:
- Flu shots
- Cancer screenings
- Smoking cessation
- Mental health services
Compare Insurance Providers
Each health insurance provider offers different plans. And some insurers increase their rates substantially year-over-year, while others have more modest increases, or may even decrease their rates, over time. Shop around before you decide on a plan.
YOUR LOCAL SMALL BUSINESS HEALTH INSURANCE RESOURCE
JC Lewis Insurance, a long-time, family-owned firm of expert brokers, is located in Sonoma County. We offer health insurance plans from many of the leading health insurance carriers licensed to offer insurance in California.
And we are licensed and certified by each of these insurance carriers to offer coverage to small group employers. In addition, J.C. Lewis Insurance Services Medicare supplemental 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 for you and your family – you will likely have many questions and concerns.
We understand that providing California health insurance options for your employees can be a daunting and complex undertaking. And you will want to find a balance between keeping costs down while offering the best options available to your workers.
At J.C. Lewis Insurance Services we welcome your questions about insurance coverage and you can be confident that we will help you find the right solution.