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Average Cost of Employer Health Insurance

According to a study published by the Kaiser Family Foundation in 2019, the average cost of employer-sponsored health coverage in terms of annual premiums was $7,188 for single coverage and $20,576 for family coverage. The report also established that the average annual deductible amount for individual coverage was $1,655 for covered employees.

Overall, despite an increase in premiums over time, the employer’s health insurance cost has remained relatively stable in the health insurance market.

How the Average Cost of Employer-Sponsored Health Insurance Has Changed

Average employer-sponsored health insurance expenses have increased modestly in recent times. The KFF 2019 survey found that the average single premium increased by 4 percent, and the average family premium rose by 5 percent over the previous year.

Nevertheless, a long-term view of employer-sponsored health insurance costs reveals a larger change in costs. According to the KFF report, the average premium for employer-sponsored family health plan rose 22 percent over the last five years and 54 percent in the previous ten years.

Even though the average premium costs have risen to a degree over the past several years, employer-sponsored health insurance may often be a more affordable choice than individual health insurance coverage.

Employer Employee Contributions to Monthly Premiums

As a small organization with less than 50 full-time equivalent employees, you are not obligated to provide group health insurance. If your company does decide to provide health coverage to your employees, you typically need to pay for at least 50 percent of employee premiums as a small employer. Bear in mind that your business can also decide to contribute a more significant amount to your workers’ premiums.

The KFF survey established that the level of employer contributions to worker premiums tends to differ:

• 31 percentof insured small firm employees had their employers pay the whole premium for their single coverage.
• 35 percentof covered small firm workers were enrolled in a plan where they contribute more than one-half of the premiums for family coverage.
• In 2019, the average amount covered by staff contributed $1,242for single coverage and $6,015 for family coverage.

The Number of Small Businesses That Provide Employer-sponsored Health Insurance

When considering the costs of health coverage for workforces, small business owners may wonder how common it is to offer an employer-sponsored plan.

According to the KFF survey, 57 percent of all firms provided health benefits, while 71 percent of firms with 10 to 199 workers (considered small firms by the survey) provided health coverage in 2019. The percentage was lower for very small groups, with the study noting that only 47 percent of organizations with 3 to 9 workers offered health coverage to their employees.

The fact that only about half of small businesses provide employer-sponsored health insurance could be advantageous for the companies that opt to offer this popular employee benefit. Providing health insurance may be an excellent way to stand out from competing employers while contributing to a company’s recruiting strategy and employee benefits package.

Generally, the KFF survey concludes by observing that trends in the employer-based coverage market have been moderate over the past several years. Premiums have surged annually, but in the low to mid-single digits, and cost-sharing, particularly for deductibles, has meaningfully increased over time.

The Importance of Affordable Employer-Sponsored Plans

Understanding the average cost of employer-sponsored health insurance can enable small business owners to explore coverage choices for themselves, their employees, and their families.

According to an April 2019 eHealth survey of small business owners, the top two most significant factors for small employers when choosing a group health plan are affordable monthly premiums and out-of-pocket costs.

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Resources and References:

• KFF Survey Report
• Advantages of Employer-sponsored Health Insurance