By The Wellthie Insights Team
The Affordable Care Act (ACA) requires business owners in most states to offer health insurance to their employees when they have 50 or more Full-Time employees (FTEs). In New York and Vermont, business owners are bound by law to make employee health benefits available when their company has 100 employees or more. If a company falls under this threshold, they should still consider providing benefits to their employees as soon as it is feasible for their budget. Offering health insurance has been proven to be an effective way to attract and retain talent; Doing so benefits a company’s employees, their families, as well as the business as a whole.
In New York, an employee would (on average) pay 233% more for an individual health insurance plan than the amount in premiums they would contribute to a small group health insurance plan. Employers are risking losing top talent and the health of their workforce by opting out of offering small group health insurance as a benefit to their employees.
The at-times staggeringly high costs of health insurance premiums can weigh heavily on small business owners and individuals who are purchasing their own coverage. Since the ACA may require an organization to offer health insurance, (depending on the size of the organization in question), business owners are naturally curious to know their cheapest health insurance options. The cheapest health insurance options for both small business owners and individuals can vary greatly based on a variety of factors. It is recommended for business owners and individuals to make a thorough comparison of health insurance options in order to guarantee they are enrolled in the most suitable coverage.
Wellthie and ValuePenguin, a free source for information and tools to help people make consumer spending decisions, dug into the New York health insurance market and compared small group and individual health insurance premium costs.
From 2017 to 2019, small group health insurance prices rose by 15%. In 2019, the average monthly cost of small group and individual health insurance is around the same at $712, with employees insured under a small group plan paying only $213 of the total health insurance premium. Small group premiums in the metropolitan areas of New York (the five largest counties) were 13.12% more costly than individual premiums. Over the past two years, small group insurance premiums have increased by 15%.
Small business owners’ group health insurance premiums have increased at a steady rate since early 2017. The average monthly premium for qualified health insurance soared by 8.92% between 2017 and 2018. And between 2018 and 2019, the average premiums for a small group health plan across all coverage metal tiers rose by $5.60%. While this is a more modest rise, small-business owners should know about these cost increases, which will undoubtedly affect a business’s bottom line.
Out of all of the metal tiers, Gold metal plans saw one of the most notable rises in average premium costs, with a 16.49% increase over a two-year period. Small business owners should take note, as Gold policies are the most common metal tier plans sold on the small group marketplace, with 172 health plans offered in 2019.
On average, individuals who do not receive health insurance through an employer spend $499 more for coverage.
For people who currently do not receive coverage through an employer or federal programs like Medicaid or Medicare, individual health insurance is available for consideration. With individual plans as opposed to group plans, the individual pays the entirety of the premiums. As a result, individual plans tend to be much more expensive for an individual as opposed to what they would be expected to contribute to their premiums if insured under an employer policy.
For this study, we decided to use an employer-to-employee contribution ratio of 70%. 70% is an industry average where an employer would be responsible for paying 70% of the monthly health insurance premiums, while employees would pay the remaining 30%.
In NY’s five largest counties, employees pay 195% more for an individual policy.
In some of New York State’s most populated areas, the differences between small group and individual health insurance premiums have even wider gaps. When compared to a marketplace policy, the monthly health insurance premiums for small group plans were, on average, 13.12% more expensive. We analyzed the Bronx, Kings, New York, Queens, and Suffolk, which are the five largest counties by population.
In aggregate, the small group policies are more expensive in these highly populated areas of the state, but there is a more narrow difference in premiums for the employee. Compared to their monthly premium contribution for small group health insurance, a person would pay, on average, 195% or $532 more for an individual policy.
Competitive employee benefits programs can attract competitive talent.
Depending on an organization’s employee population, small-business owners may be required by the ACA to offer their employees health insurance options. The ACA does not currently have the individual mandate in 2019, but the employer mandate is still in place, and something for employers to keep in mind. According to the ruling, employers with 50 or more FTEs are required to offer minimum essential coverage or face a penalty. However, if a company has fewer than this number of employees, an employer is not required to offer their employees health insurance coverage. But despite the ACA’s mandate, there is a multitude of reasons it can be beneficial to provide employee coverage.
Choosing to offer health insurance to employees can positively impact your employees and business overall. In the Harvard Business Review’s survey of the “Most Desirable Employee Benefits,” over 88% of respondents mentioned better health, vision and dental insurance as a primary factor when deciding whether or not to accept a job. If employers decide not to offer insurance, they may lose out on potentially strong candidates for positions at their company. This loss could negatively affect profits and bottom line, as companies won’t be hiring the best workers for the job.
New York Complete Rankings of Counties and Their Average Group and Individual Premium Costs
Wellthie, along with ValuePenguin, compiled health insurance plans and quotes from the New York small group and individual health insurance marketplace. ValuePenguin possesses a wealth of valuable data, which, coupled with Wellthie’s in-depth knowledge of the small business health insurance industry, enabled ValuePenguin and Wellthie to collaborate to produce a thorough analysis of small group and individual health insurance premiums in New York State. The quotes and plans used in this study were pulled for the 2019 plan year for a single individual and then were averaged depending on the coverage metal tier. For all of the employer-employee contribution calculations, there was an industry standard of a 70% contribution from the employer used. Census Intercensal County Population Data was used in calculating the largest counties in New York to determine which were the most populated.