The Cost of Small Business Health Insurance By State
By: Christina Merhar (Zane Benefits) April 2016
As your small business evaluates health insurance, understanding cost is an important input. The cost of health insurance depends on a few factors such as: the type of health insurance purchased (ex: group health insurance or individual health insurance), the carrier and plan selected, your location, and your age (or employee census). This article breaks down the average cost of health insurance by state for two different small business approaches 1) individual health insurance with a defined contribution, and 2) group health insurance.
Note: The data from this article is from our recent publication, “The Employer-Funded Individual Health Insurance Annual Report 2016.” To download the complete resource, click here.
Health Insurance Definitions
In the chart below, the costs of health insurance by state are broken down into categories: defined contribution and group health insurance.
Here are simple definitions of these two small business health benefit options:
Defined Contribution: Individual employees purchase an individual or family health insurance policy and the company reimburses employees for a portion of the premium. The policy is selected and managed by individual employees. Employers use a formal, compliant reimbursement plan for tax-advantages and compliance.
OR
Group Health Insurance: The company purchases a group health insurance policy and employees reimburse the company for a portion of the premium. The policy is selected and managed by the company.
Chart – Cost of Health Insurance by State
According to the recent Zane Benefits annual report, employers using a defined contribution health benefits solution are realizing cost savings of 57 percent, on average, compared to average group health insurance costs.
The comparative value of a defined contribution health benefits solution varies by employer and by region. The following chart provides a visual comparison of average savings by state. The data takes into consideration average employer-funded reimbursement amounts by state (Zane Benefits, 2015) as well as average group health insurance costs by state (Kaiser/HRET, 2015).
For a more detailed look at cost of health insurance by state, download the full report here.
Conclusion
How much does small business health insurance cost? The answer will largely depend on which type of health insurance your or your employees purchase, and your region. Nationwide, employers using defined contribution health benefits are saving 57 percent, on average, compared to average group health insurance costs.
