Small business health insurance premiums cheaper than individual market
An analysis from eHealth found that the average premium under a small business plan was 7 percent lower than an individual plan.
Small business plans have lower average per-person costs compared to coverage in the individual market, according to eHeath’s report, “Small Businesses Health Insurance: Costs, Trends and Insights 2018.”
eHealth analyzed plans on its platform selected by employers with fewer than 30 employees, and found that the average premium per-person under a small business plan in 2018 was 7 percent lower than the average premium for an individual plan ($409 vs. $440). Moreover, the average individual deductible for small business plans was 31 percent lower than the average deductible for individual coverage ($3,140 vs. $4,578).
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Small business plans also show “significantly more premium stability” than individually purchased coverage, according to the report. While the average per-person premium for small business coverage rose only 5 percent between 2015 and 2018, individual premiums for those who buy their own coverage increased 54 percent in the same period (from $286 in 2015 to $440 in 2018).
eHealth also polled nearly 200 small business owners who purchased their group health insurance policies through its platform, and found that the single most important reason why they offer health benefits to workers is that it helps them hire and retain the best employees (66 percent of the respondents say this).
Forty-three percent of the respondents say the main reason is because they feel a moral obligation to offer health benefits; 27 percent say it’s because they feel it encourages productivity; 26 percent offer benefits because their employees couldn’t afford coverage on their own; and 11 percent say they offer coverage for the tax benefits available to them.
While the repeal of the Affordable Care Act’s tax penalty doesn’t impact employers’ coverage decisions, moderate increases in premiums could cause most small businesses to drop coverage, according to the survey’s results.
Just 4 percent of survey respondents say the penalty’s repeal will make them less likely to offer coverage; 76 percent say it will make no difference to their decision; 4 percent say they are now more likely to offer coverage; and 16 percent say they didn’t know how this change may affect their coverage decisions.
On the other hand, 63 percent say an increase of 15 percent or less in monthly premiums will make their current plan unaffordable.
“More than eight in 10 small businesses worry about affording coverage in the future,” the authors write.
Forty-one percent are “very concerned” about their continued ability to offer employee health benefits and 42 percent are “somewhat concerned”—though 17 percent are not concerned at all about their future ability to offer health coverage.
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