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How much does group health insurance cost?

As employers search for health insurance coverage options, it is common for them to evaluate different strategies and the costs associated with them.

So what is the cost of group health insurance? In 2020, the Kaiser Family Foundation (KFF) found that the average premium for individual coverage was $ 622.50 per month, or $ 7,470 per year. The average family insurance premium was $ 1,778.50 a month or $ 21,342 a year.

Group health insurance costs

According to the KFF survey, the average group health insurance policy is $ 7,470 per year for individual coverage in 2020. On average, employers pay 83 percent of the premium, or $ 6,227 per year. Employees paid the remaining 17 percent, or $ 1,243 a year.

For family coverage, the policy averages $ 21,342 per year and employers contribute, on average, 74 percent or $ 15,754. Employees paid the remaining 26 percent, or $ 5,588 a year.

Several factors influence the costs of your organization's policies, including:

  • Your place
  • Personnel counts (demographics)
  • number of participants
  • Conveyor
  • Plan coverage
  • Structure of the plan
  • Service provider network

The high costs of group health insurance

As you research policies, keep in mind that group health insurance costs are increasing.

According to the KFF, since 2010, average family premiums have risen by 55%, which is at least twice as fast as wages (27%) and inflation (19%).

In 2020, 83% of covered workers got a discount with their plan, up from 70% a decade ago. The average individual discount in 2020 for workers with one was $ 1,644, compared to an average of $ 917 in 2010. These two trends lead to a 111% increase in the deduction burden among all covered workers.

Is there an alternative to paying for group health insurance?

Yes. Employers can control health insurance costs with a simple solution: pay premiums instead of paying them.

In other words, employers can compensate tax-exempt employees for their individual health insurance premiums by creating a formal, compliant Health Compensation Agreement (HRA), such as an HRA for Qualified Small Employers ( QSEHRA) or an Individual HRA Coverage (ICHRA). By doing this, employers can set their costs on a monthly basis and employees can choose the individual health insurance policy that best suits their health and financial situation.

In addition to offering more options, individual health insurance reimbursement is a cost-effective solution for employers who want to provide health care benefits to their employees.

When evaluating group health insurance costs, it can be helpful to understand national trends and receive detailed quotes from an agent. If the costs or complexity of group health insurance are very high, one option to control costs while providing high-quality health benefits to employees is the Individual Health Insurance Reimbursement Program.