Health Insurance

How Much Does Small Group Health Insurance Cost for Employers?

Turns out, this is a doozy of a question. Put simply, there’s a big range in how much small group health insurance costs for employers because there are many factors at play.

There are some factors where your choices can impact the health insurance cost your business will bear, and then there are ones you can’t control.

small group health insurance cost factors

Health insurance premium factors you have control over

Here are the choices you can make that impact how much you as the employer will pay for small group health insurance:

  1. Your plan tier

There are different tiers of health insurance plans available to small businesses:

  • Bronze (the lowest priced tier)
  • Silver
  • Gold
  • Platinum (the highest priced tier)

The Affordable Care Act (ACA) requires plans at each metal level to cover a certain percentage of average health care costs. It’s roughly 60% for Bronze, 70% for Silver, 80% for Gold, and 90% for Platinum.

Insurers have a lot of leeway in terms of how they design their plans, so you’ll still see plenty of variation, even for plans at the same metal level. As you can imagine, plans with better benefits generally come with higher premiums.

  1. Which carrier you select

Whether you go with Blue Cross Blue Shield, Kaiser Permanente, or another option, the insurance carrier you choose can impact the price you get. Though tier prices tend to be pretty similar, each carrier does have its own flavor of offerings and costs.

  1. How much your company contributes

You can think of this as a sliding scale.

If you decide to contribute 100% of your employees’ health insurance premiums, your costs would be higher than, say, if you decide to only contribute 60% towards your team’s premiums.

Similarly, your costs will change depending on whether and how much you choose to contribute to the premiums of your employees’ dependents.

Health insurance premium factors you don’t have control over

And here are the factors that can impact small group health insurance costs, no matter what plan or employer contribution choices you make:

  1. Location

Where your business and employees are based plays a big role in insurance costs. Prices and plans can vary by state or region.

  1. Age of enrollees

Older employees typically have greater health needs than younger employees. So if your business is comprised mostly of twenty-somethings, your group’s health insurance premiums may be much less expensive than a group consisting primarily of employees in their fifties and sixties. (The exceptions are Vermont and New York, where premiums don’t vary based on age.)

Depending on whether your plan is set up to use composite rating or member-level rating, individual enrollees may or may not pay different premiums based on their ages.

  1. Tobacco usage

Do your employees use tobacco regularly?

While many carriers do not consider tobacco usage, they are allowed to charge tobacco users as much as 50% more for their premiums. The exception is if you’re in California, Connecticut, District of Columbia, Massachusetts, New Jersey, New York, Rhode Island, or Vermont, where tobacco surcharges are not allowed.

In order to apply a tobacco surcharge, however, a small employer is required to offer a tobacco cessation/wellness program that will allow participating employees to avoid the tobacco surcharge.


Want to get a quote for your small business? Talk to a broker. They’ll ask you some questions and provide an accurate estimate of what it’ll cost based on what’s right for your unique business and team.

This article provides general information and shouldn’t be construed as legal, benefits, or HR advice. Benefits and insurance regulations may change over time and may vary by location and employer size. So, please consult a licensed broker or appropriately certified expert for advice specific to your business’s benefits options.