But offering group health insurance isn’t always as easy for small businesses as it is for big corporations. It can be a much bigger expense for small businesses to consider and take on. Whether you’re trying to figure out if you can afford to offer health insurance to your employees, or you want to have a sense of what to expect to pay when that day arrives, here’s a look at the cost of small business health insurance.
Premiums
Monthly premiums are the central costs that small businesses face when offering group health insurance as an employer. According to a 2021 report from the Kaiser Family Foundation, the average monthly premium that small firms (businesses with between 3 and 199 employees) paid per worker was $651 for individual coverage. For family coverage, small firms paid an average of $1,817 per worker.
However, it’s important to keep in mind that these are just averages. What you’ll actually pay will be influenced by a range of factors, including the kind of plan you offer, the ages of your employees, where your business is located, and where your employees are located.
HSA contributions
Even though HSA contributions aren’t a required part of offering health insurance to employees, they’re an attractive option for small businesses that are looking to reduce their tax burdens. According to a 2022 report from Devenir, a health-based investment firm, the average annual employer HSA contribution was $869.
While you can’t deduct HSA contributions made to any owners, HSA contributions made to employees are generally tax deductible as a business expense.
Plan Administration
Aside from financial costs, there are also operational expenses to consider when it comes to offering health insurance.
Many insurers offering group employee plans require approximately 70% participation from your workforce in order to keep offering the plan in the first place. So, that means that someone at your small business will have to ensure that you’re picking the right plan and securing the minimum participation percentage necessary to offer it. If that sounds complex and confusing, you’re right—there’s no easy way to make sure you’re hitting that mark.
Then there’s the annual renewal process. That’s the time of year that insurance companies update and alter their plans; when employees decide to join, continue, or opt out of employer coverage; and when the businesses offering insurance decide which plan they’re going to offer, how much of the costs they’ll cover, and the like.
As you might imagine, renewal time means a lot of communicating with insurance companies as well as employees. It means answering a lot of questions, understanding new plan parameters, and getting it all done within the specified renewal timeframe.
It’s not easy, which is why many small businesses turn to digital health care options like Galileo. With 24/7 access to care, from preventive needs to chronic condition management all through an easy to use app, Galileo offers healthcare without headaches. And at just $19 per member each month, it’s an attractively affordable option.
Galileo works just as well as a stand-alone product as it does as a supplemental option. Maybe your small business can’t afford to pay as much of your health plan’s premiums as you’d like. Perhaps you aren’t quite able to make HSA contributions yet. Galileo helps small business owners offer health care perks at a lower cost without the administrative hassle—because we know that small business owners have more important things to do.