Perhaps you’re a small business owner and you’ve never purchased health insurance for your employees before. If so, then the cost is likely going to be a major concern for you. And, if you already have small group health insurance in place, you may still wonder if you’re paying too much.

So, the question is just as relevant: “What’s the average cost of small group health insurance in California?”


Small-Group Health Insurance Cost Factors

The simple answer, of course, is, “It depends.”

But that isn’t very helpful and, if you are making an initial decision based on what you know your business can afford, even an approximate cost range can be helpful. Laying aside for a moment the very real element of varying cost factors, currently, the average monthly premium cost is about $400 to $600 per employee. 

One source reported that,

“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.”

Keep in mind that this is for individual coverage only. For a plan that covers their entire family, the employee has to contribute $6814 a year, or $568 each month, on average in premiums. Typically, the employer covers the rest, according to the Society for Human Resource Management (SHRM).

To make matters a bit more complicated, different sources report slightly different average costs. For example, according to research from the Kaiser Family Foundation (KFF), the average employer premium for small businesses in 2018 was $6,896 per worker. Employers contributed about 80 percent of the premium, leaving employees to cover the remaining 20 percent.

That was in 2018. Costs have risen since then. According to KFF,

“In 2019, the average annual premiums are $7,188 for single coverage and $20,576 for family coverage. The average premium for single coverage increased by 4% since 2018 and the average premium for family coverage increased by 5%. The average family premium has increased by 54% since 2009 and 22% since 2014.”

What does this mean for the employer?

A survey from the National Business Group on Health (NBGH) found that employers will cover nearly 70 percent of the cost and employees will be paying about 30 percent in 2020. While the cost-sharing amount is unchanged from 2019, the NBGH predicted that health insurance costs for large employers would increase five percent in 2020. That would be $15,375 per employee – an increase of $733 per employee from 2019. 

What are some of the cost factors that cause health insurance costs to change from year to year? 

According to information from Zenefits.com,

Research shows that there are many forces at play. For example, health insurance premiums for 2020 could vary from those in 2019 due to the following:


  • The fundamental growth in healthcare costs caused by changes in provider rates, healthcare services offered, and healthcare usage


  • Policy requirements and changes, such as expanding access to healthcare via HRAs, eliminating the ACA’s individual mandate penalty, and providing cost-sharing reductions via the ACA Marketplace
  • Other factors, such as market competition, state actions, geographic variables, and changes in risk-pool profiles and employer benefits strategies”



Benefits of Providing Small Group Health Insurance

The good news is that offering coverage is not all costs and expenses – there are benefits for the employer by doing so.

By purchasing health insurance for yourself and offering it for your employees, you can qualify for tax credits. However, in order to qualify, you must purchase your small group health insurance plan through the Small Business Health Options Program (SHOP) Exchange. This is an insurance portal created by the Affordable Care Act (ACA).

To be eligible, you must meet the following requirements:

  • Have fewer than 25 full-time employees (FTE), or the equivalent, based on working hours
  • Offer health insurance to all of your full-time employees
  • Pay average annual wages of less than $50,000 per full-time employee
  • Cover at least 50 percent of the premium cost of the health insurance

While the amount of your small business tax credit will vary depending on those factors, you can receive up to 50 percent off your contributions toward employee premiums. This can significantly reduce the cost of providing benefits for your employees.

In addition, you can receive other tax benefits. Fundera notes that,

“Beyond the SHOP tax credit, you’ll also be able to write off the health insurance premiums you pay as tax deductions, saving even more money. Small business owners can save a lot by deducting expenses, and health insurance premiums are one of the most common small business tax deductions out there.”

Of course, there are other benefits to you as an employer including increased employee loyalty and decreased turnover. In fact, a Harris poll found that 86 percent of workers said that receiving comprehensive medical benefits would influence them to choose one job over another that didn’t.

In addition, you can benefit from increased and sustained productivity. This is because employees without health insurance are less likely to get annual checkups or go to health care providers when they get sick. This will lead to a decrease in productivity over time as workers get even sicker and end up taking more time off from work.


Your Partners for Small Group Health Insurance

JC Lewis Insurance offers California employers health insurance plans only from leading health insurance carriers licensed to do business in California.

In addition to being expert brokers, we are licensed and certified by each insurance carrier to offer coverage to individuals, families, small group employers and to seniors with Medicare supplemental and prescription drug plans. We assist small business employers with the initial set-up, annual renewal, and on-going maintenance needed.

If you’re a small business owner looking to provide insurance coverage for your employees, you likely have many questions and concerns. Bring your questions about small group insurance and you can be confident that JC Lewis Insurance Services will help you find the right solution.