It’s no secret that healthcare bills can be expensive, and the cost of health insurance can add up quickly. Businesses who want to provide health insurance for their employees typically go for a large group health insurance plan to save money and provide adequate coverage for their people. But how much does a large group health insurance plan cost and what factors contribute to the cost? In this blog, we’ll delve into the cost of large group health insurance plans, and how businesses can prepare and budget for them.
The cost of a large group health insurance plan is dependent on various factors such as the industry the company operates in, geographical location, employee demographics, and the level of coverage the business wants to provide. Generally, a company’s premium contribution to the plan is calculated depending on the sum of employees’ premiums for the coverage level chosen. The company then decides what percentage of the total cost they want to pay. The industry and location of the business also impact the cost of group health insurance. In states with high medical costs, the premiums are also generally higher. On average, employers contribute 82% of the total cost of premiums for single coverage and 71% for family coverage.
Beyond the premiums, there are other costs associated with a large group health insurance plan that every business needs to consider. For instance, there is the need to cover employees’ out-of-pocket expenses, which fall under coinsurance, co-payments, and deductibles. Generally, employers pay 80% of employee coinsurance and cover 100% of preventive care. Additionally, businesses with a self-funded group health plan will also fund and pay for claims that exceed the plan’s monthly administrative fees.
When considering a large group health insurance plan, it’s important to understand the potential long-term costs. The benefit of offering group health insurance plans is that it can reduce absenteeism, improve employee satisfaction, attract new employees while retaining existing ones, and increase productivity. In contrast, if a business fails to provide adequate coverage for their employees, it may result in high employee turnover, which will cost the company a lot more in the long run than just paying for the premium.
Further, an excellent way to control costs is to consider the Health Savings Account (HSA) option. HSAs offer triple tax advantages, and the employer can contribute money to the employee’s HSA account. It goes tax-free and can be used to pay for qualified medical expenses, including co-pays and deductibles. It is an excellent option for businesses looking to save money in the short and long run.
In conclusion, the cost of a large group health insurance plan is dependent on various factors, and employers need to understand the potential long-term costs and benefits of offering adequate coverage to their employees. The HSA option is a great way to control short and long-term costs while providing an excellent employee benefit. With a little planning, budgeting, and preparing, businesses can offer group health insurance plans that meet their employee’s needs while staying within budget.