Michigan Business Vs. Individual Health Insurance: A Cost Comparison

By The Wellthie Insights Team

In the state of Michigan, an individual health insurance policy is 86% more expensive than the monthly premium for a small group plan.

As an employer, depending on your business’ size, you may be required under the Affordable Care Act (ACA) to offer your employees qualified health insurance options. Employees who don’t receive health insurance coverage through a job will need to purchase an individual health care plan. For families, Individuals, and business owners alike, health insurance premiums can seem like an enormous financial burden.

In 2017, health insurance premiums in the state of Michigan accounted for 36% of an individual’s median household income. Naturally, it is recommended to seek out where you can compare health insurance and save money to find the best policy at the lowest available price.

Wellthie partnered with ValuePenguin, a free source for information and tools to help people make consumer spending decisions, to analyze Michigan health insurance plans and identify small group and individual health policy premium differences.

Major Findings

On average, small group policy premiums are $271 cheaper per month when compared to individual health insurance plans.

If you currently do not receive health coverage sponsored by an employer or a federal health insurance program like Medicaid, individual health insurance is available for purchase through a state marketplace. The individual pays entirely for a marketplace policy, which can usually make the policy more costly than a group plan, for which a person would only pay a portion of the monthly premium’s total. 

In the below table, you can notice these differences in health insurance premiums. Group health insurance plans in the Gold tier were 111% less expensive than individual policies. However, individuals whose incomes fall below the federal poverty level may be eligible for premium subsidies on individual plans. Click here to check if you qualify for these subsidies through Michigan’s health insurance marketplace.

 This study utilizes a 70% employer-to-employee contribution ratio of 70%, an industry average for health insurance, meaning that an employer would be responsible for paying 70% of the monthly premiums, while employees would pay the remaining 30%.

As is illustrated below, employees will find significantly cheaper health insurance costs through small group plans as opposed to individual policies. Employees will pay $605 more for an individual Gold-level plan than their share of a small group health insurance premium. Compared to an employee’s percentage of a small group premium, an individual plan will be, on average, 539% more expensive.

On average, employees will pay $518 less for group health plans than individual plans through the Michigan marketplace in Wayne, Oakland, Macomb, Kent, and Genesee. 

When analyzing policies in Michigan’s most highly populated counties, the gap between the group and individual health insurance costs only widens. Group policies will be 137% less expensive than individual health insurance plans of the same metal tier across Bronze, Silver, and Gold metal levels. In Michigan’s five largest counties, Platinum individual health insurance policies were not offered and therefore were not a part of the analysis. 

In 2019, monthly premiums for small group health insurance reached an average of $315, a 3% increase from the cost in 2018.

From 2018-2019, small businesses witnessed a minor increase in per-employee group health insurance costs. The metal-level group health insurance policies which saw the most significant monthly premium increase, with premiums rising $18 over a single year, were Bronze plans.

Gold health insurance policies saw the least significant YOY change, with only a 0.46% increase since the year 2018. Employers should note the Gold tier health insurance plan is the most common policy offered in Michigan, with an average of 121 Gold policies available in each county.

From 2018-2019, small group plan deductibles raised by 2%. 

Depending on the tier, deductibles can vary greatly. Additionally, deductibles directly affect the amount an employee will have to pay for health insurance. It is beneficial for employers to analyze deductibles and decide what plans will be of the most value to their workers. By providing a high tier plan such as Gold, employees will gain access to coinsurance benefits more quickly and will not have to spend as much money out of pocket. 

The most massive increase in deductibles occurred in Gold health policies, which spiked 12% year over year.

Michigan Complete Rankings of Counties and Their Average Group and Individual Premium Costs

Technique

Wellthie, in conjunction with ValuePenguin, compiled and researched individual and small group health insurance policies from the Michigan state marketplace. Wellthie is a national, online small group benefits marketplace that allows a business owner to connect and interact with hundreds of carriers and a licensed broker network. Here they can find a benefits program that can be tailored to their business needs. Wellthie has in-depth knowledge of the small group health industry and can provide some of the most accurate quotes available.

In this study, all plans and quotes were generated from the 2019 plan year for a single individual and then averaged based on coverage metal tier. An industry standard of a 70% employer contribution was used for all employer-employee contribution calculations. Census Intercensal County Population Data was utilized to determine the most populated counties in Michigan.