Helping Clients Understand the Cost of Health Insurance

Cost of Health Insurance

Cost is a big consideration for small businesses when it comes to health insurance.  Some employers – particularly those considering health insurance for the first time – often don’t know what to expect. They may be unaware of what affects the cost of coverage. They do not know all of the coverage options available. They may lack information about what their employees will have to pay for their share of the premium, or the costs beyond the premium (like copays and coinsurance). They don’t know what value-added extras you may be able to offer them.

Helping your prospects and clients understand these things can make it easier for them to make decisions – and for you to close the sale.

How much does group health insurance cost?

An employer’s cost of group health insurance is influenced by many factors, including:

  • The number of employees (and dependents, if applicable) to be insured
  • Whether the group wants to cover only full-time employees or full-time and part-time employees
  • Whether dependents like a spouse, domestic partner, or children are insured
  • The type of coverage selected – HMO, PPO, EPO, and/or HSA-qualified plans
  • Whether the business is an Applicable Large Employer (ALE) under the Affordable Care Act (ACA) and is required to offer coverage under the Shared Responsibility Provision (sometimes called the ACA employer mandate) [An ALE is an employer with an average of at least 50 full-time or full-time-equivalent (FTE) employees working at least 30 hours per week.]
  • The business ZIP Code and the ages of employees (and dependents) to be insured
  • Whether the employer offers coverage from a single health plan, two plans, or coverage from a private exchange that includes multiple health plans through a single program (like CaliforniaChoice)

When you meet to talk with a prospect or client, you will want to be prepared with information on plan eligibility guidelines, the coverage options available in your area, doctors and hospitals associated with each plan’s provider network, and rules for ALEs (if you know whether the business employs 50 or more workers). If you’re unsure whether the business is an ALE, download the ACA calculator on our website.

You will also want to be prepared to discuss the 2022 forecast for average health plan premiums, which are addressed below.

Average Health Insurance Costs

In November 2021, the Kaiser Family Foundation (KFF) released the results of its yearly survey on average annual premiums for employer-sponsored coverage across all plan types. It found an annual average of $7,739 for single coverage and $22,221 for family coverage.

Premiums for workers in small and large firms were similar: $7,813 for small businesses for single coverage, and $7,709 for large firms for single coverage. Average family coverage premiums were $21,804 for small firms and $22,389 for larger organizations.

According to KFF’s analysis, on average, insured employees contribute 17% to the premium cost for single coverage. Employees with family plans contribute an average of 28% toward their premium. At smaller firms, covered workers’ contributions for family coverage are higher: 37% on average.

Plan-specific finding by KFF for average 2021 worker contributions for single coverage were:

  • $1,183 for a Point of Service (POS) plan
  • $1,204 for an HMO
  • $1,242 for HDHP coverage
  • $1,389 for a PPO

For family coverage, the average annual employee contributions were:

  • $5,129 for HDHP coverage
  • $5,254 for an HMO
  • $6,428 for a PPO
  • $7,512 for a Point of Service (POS) plan

Of course, the KFF analysis is based on national data, and it should only be used as a benchmark. You may want to run a comparison of plan pricing in your market to determine if your client’s cost could be lower than the national averages. If you need help, your Word & Brown representative is just an email or phone call away.

The Society for Human Resource Management (SHRM) found employers are expecting increases of around five to six percent for 2022.

Another factor affecting your client’s potential cost is what premium contribution percentage is made for each employee. While most insurance carriers require a 50% contribution by the employer, some business owners may choose to contribute more – particularly for single coverage – as suggested by the KFF study mentioned above.

Value-Adds You Can Offer

As a Word & Brown broker, you have access to many value-added benefits you may be able to offer to your clients, including:

  • WBMedID: Our exclusive mobile app gives California groups’ employees enrolled in four carriers’ products access to their Medical ID Card information on their smartphones as soon as coverage is approved. Ask your Word & Brown rep for details. (Available to Aetna, Anthem Blue Cross, Blue Shield of California, and Health Net enrollees.)
  • Online enrollment: Word & Brown works with Ease to offer you and your clients access to a powerful enrollment solution that speeds up enrollments and helps clients better manager their employee onboarding and benefits administration. Ask us for a demo.
  • HR Support: Offer your clients access to the pros and resources at MineralTM, with a suite of powerful online tools and resources that includes employee handbooks, training, regulation updates, and more.
  • COBRA and POP: Depending on your client’s group size, it may be eligible for COBRA administration services and a Premium Only Plan courtesy of you and Word & Brown.
  • CE Courses: Many of Word & Brown’s Continuing Education (CE) courses are open to your clients – and offer SHRM and HR Certification Institute (HRCI) credits. Link to our website for a list of employer CE courses.
  • WBCompliance: We make complicated matters seem simple – for you and your clients. Our in-house team of compliance experts offers useful guides on ACA Affordability, mandates, Minimum Essential Coverage, and other topics. The team is available to respond to employer reporting and other questions, too.

In addition, WBQuote and WBQuote Lite make it easy for you to instantly search, confirm, and build quotes for your clients that include their preferred doctors, medical groups, hospitals, and needed prescription drugs for enrolling employees. For details on all these “extras,” talk with your Word & Brown representative.

Get More Help from Word & Brown

For 35+ years, we’ve been known for our “Service of Unequalled Excellence.” No other General Agent is focused more on helping you strengthen your existing client relationships and prospect for new ones.

Our cutting-edge quoting technology, innovative tools and resources, and in-house experts, coupled with a roster of carriers and administrators offering a diverse range of plans and services, can help you set yourself apart. It also helps you improve your service to prospects and clients. Call or email your Word & Brown rep today, or, if you are not already working with us, contact any of our offices across California and Nevada to get started.

 

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