Posted in Offering health benefits

How Much Does Health Insurance Cost?

Updated as of June 2018.

 

The average cost of health insurance per employee is $558 a month, found the latest study from the Kaiser Family Foundation.

A slim 17 percent of small business owners believe health insurance is affordable, yet 27 percent still offer it. Why the disparity? Because the employers who offer it know something important—you can have a big say in what your final price will be.

There are many ways you can personalize your plan to make it practical, exhaustive, and something you can actually afford.

In this article, we’ll help you prepare for the cost of health insurance by breaking down how the average health insurance premium is calculated.

But first, what’s a health insurance premium?

A premium is the amount you and your employee pay each month for health coverage. The average price depends on your plan type, business location, makeup of your team, and how much you want to contribute toward your employees’ premiums.

To summarize, here’s a quick breakdown of how premium prices are set:

  • Comprehensiveness of coverage.
  • Location, age, and smoking history of your employees.
  • How much of the premium you want to cover for your employees.

Now, let’s get a sense of what the costs look like.

Here’s how much health insurance costs for employers.

We dug into the data from the Kaiser Family Foundation’s Employer Health Benefits Survey* to find out what the average premium price per employee was for 2017.

Keep in mind that this is the total cost for an employee’s monthly premium. The amount you’ll pay as an employer can be much lower, since your team can also take care of a part of that total.

Monthly price per employee* Yearly price per employee*
PPO $580 $6,965
HMO $588 $7,052
All plans $558 $6,690

*Total price is split between the employer and employee

Where you’re located also influences your final price. So if your business is in a place where the cost of living is high, chances are your insurance price will be higher too.

Castlight Health’s US Cities Analysis found that a doctor’s visit in San Francisco can cost $215, while in Miami the price is $96. It makes sense, considering the City by the Bay is steeper (in more ways than one) than the Magic City.

Here’s how the premium price breaks down by geographic region and plan type.

Monthly price per employee* Yearly price per employee*
PPO Northeast $637 $7,641
Midwest $592 $7,105
South $541 $6,489
West $604 $7,250
HMO Northeast $639 $7,663
Midwest $613 $7,356
South $529 $6,353
West $599 $7,191

*Total price is split between the employer and employee

The data shown here is from the Kaiser Family Foundation, and is used for illustrative purposes only. Your specific health insurance prices will vary.

What about dental and vision insurance?

Offering dental and vision plans is crucial. In most cases, these two kinds of coverage are broken out from your medical insurance premium. That means they’re paid separately, and they also cost much less than a medical plan does.

According to Kaiser, 67 percent of small businesses that provide health insurance also offer dental insurance, while 54 percent also offer vision coverage.

Employers offer these two benefits because they know that dental and vision coverage are key elements of preventive care. 

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Dental, vision, and medical—it’s a lot to wrap your head around. But each type is an essential part of a meaningful benefits package. And thanks to these projections, you should now have a clearer idea of what your health insurance cost will look like when you’re sorting through plans.