For a small business the monthly premium payments for coverage – is often the most important number to consider.
To get a sense for what you can expect to pay for employee health benefits, start by looking at the average annual premium costs for single coverage which in 2018 stood at $6,814. Premiums are typically shared by the employer and employees and that split is determined by the employer. Keep in mind that in 2018, the average small employer premium contribution for employee only coverage was 82%.1
The plan type will govern how much you and your employees will pay for monthly premiums. Typically, health plans with lower premiums require your employees to pay more for medical services before insurance kicks in. The three most common plan types are high deductible health plans (HDHPs), Copay only plans and traditional plans.
Your plan's network is also a key factor in pricing. The same plan with a different network type will make a big difference in monthly premium cost. The two most common networks are Preferred Provider Organizations (PPOs) and Narrow networks.
A cost-effective tool to help offset health care costs are tax-advantaged savings accounts. There are several types of these accounts, but the basic concept is an investment plan that allows your employees to save for retirement or health care expenses using their pre-tax income via payroll deductions.
There are two main types of tax-advantaged savings account: Health Savings Account (HSA) and Flexible Spending Account (FSA). The HSA can only be used with HDHP while a FSA can be used with any type of health plan offered by an employer.