How Much Does Health Insurance For Small Business Cost In 2023?
Health insurance is an essential part of running a successful small business. Without health insurance, employees who get sick or injured may not be able to continue working, resulting in costly lost productivity. Health insurance also helps attract and retain employees, as well as helping to protect businesses from potential lawsuits. The cost of health insurance for small businesses can be daunting, but there are ways to reduce the cost.
Factors that Affect the Cost of Health Insurance
The cost of health insurance for small businesses is affected by several factors. The size of the business and the number of employees enrolled in the health plan will play a role in determining the cost. The type of coverage offered, the deductible amount, and the co-payments required by the plan can also affect the cost. In addition, the age and health status of the employees enrolled in the health plan can have an impact on the cost.
Cost of Group Health Insurance
Group health insurance plans are typically the most cost effective choice for small businesses. According to the Department of Labor, the average employer-sponsored health insurance premium for a single employee in 2018 was $6,896, with employers paying an average of $5,547 of that amount. Small businesses with fewer than 10 employees typically pay slightly more than larger businesses, but the cost can vary significantly depending on the type of plan chosen.
Cost of Individual Health Insurance
Individual health insurance plans are an option for small businesses that do not offer group health insurance. However, the cost of individual health insurance plans can be significantly higher than group health insurance plans. According to the Kaiser Family Foundation, the average monthly premium for an individual health insurance plan in 2018 was $440, with individuals paying an average of $393 of that amount. In addition to the higher premiums, individual health insurance plans typically have higher deductibles and co-payments than group health insurance plans.
Cost of Short-Term Health Insurance
Short-term health insurance plans can be an attractive option for small businesses, as they are typically less expensive than other types of health insurance plans. However, the coverage provided by short-term health insurance plans is limited, and they do not meet the requirements of the Affordable Care Act. According to the U.S. Department of Health and Human Services, the average monthly premium for a short-term health insurance plan in 2018 was $124, with individuals paying an average of $111 of that amount.
Cost of High-Deductible Health Insurance Plans
High-deductible health insurance plans can be an attractive option for small businesses, as they typically have lower premiums than other types of health insurance plans. However, the deductibles and co-payments associated with these plans can be significantly higher than other types of health insurance plans. According to the Kaiser Family Foundation, the average monthly premium for a high-deductible health insurance plan in 2018 was $342, with individuals paying an average of $299 of that amount.
Cost of Self-Insured Health Insurance Plans
Self-insured health insurance plans are an option for small businesses that want to retain control of their health insurance costs. With self-insured plans, the employer pays all or most of the cost of employee health care claims. The cost of self-insured health insurance plans can vary significantly depending on the type of plan chosen and the amount of risk the employer is willing to take on. According to the Society for Human Resource Management, the average cost of self-insured health insurance plans in 2018 was $7,490 per employee.
Cost of Health Savings Accounts
Health savings accounts are an attractive option for small businesses that want to offer employees tax-advantaged savings options for health care expenses. Employers can contribute to employees’ health savings accounts, and employees can make tax-deductible contributions. The cost of health savings accounts will vary depending on the type of account chosen, the amount of employer contributions, and the amount of employee contributions. According to the U.S. Department of the Treasury, the average cost of a health savings account in 2018 was $2,711 per employee.
Conclusion
The cost of health insurance for small businesses can be daunting, but there are ways to reduce the cost. Group health insurance plans are typically the most cost effective choice, but individual health insurance plans, short-term health insurance plans, high-deductible health insurance plans, and self-insured health insurance plans can all be attractive options for small businesses. Health savings accounts can also be a cost-effective way to provide employees with tax-advantaged savings options for health care expenses.
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