Federal and state laws dictate that the cost of small business medical insurance be set based on two factors:
- the age of the employee and dependents; and,
- the location of the business.
So, if you have older employees you should expect to pay more than if you have younger employees. The federal law limits the difference in the monthly cost of medical insurance (politely called a “premium” in insurance-speak) so that the oldest person (age 64) doesn’t pay more than three times the premium of the youngest person (age 21).
The rate/cost/premium is standardized based on age and location; however, if you offer a Platinum level plan you’ll pay more than a Bronze level plan. If you think platinum, gold, silver and bronze are only used by jewelers and you don’t know how this relates to medical insurance, see this summary of the Rules of Small Business Health Insurance.
Thankfully, insurance companies can NOT charge more for pre-existing medical conditions. You get the same rate if you’re fit and healthy as if you’re extremely sick. Also, insurance companies can’t raise your rate or cancel coverage if someone gets sick or injured.
Estimated cost per employee: While it’s good to know that the rates and benefits vary based only on age and location; you probably want to get a specific number so that you can determine whether you can afford to offer medical coverage to your employees. So how much does it cost? As of July 2017, a ball park monthly premium would be $250-$500 per month per employee. There are plans for as little as $150 – $200/month for very high deductible bronze plans and young employees and dependents. You may want to estimate $300- $400 per employee per month as a ball park amount.
While that is an estimate of 100 percent of the monthly cost of a small business health insurance plan per employee; know that you can share the cost with your employees. The law only requires that employer to pay as little as 50 percent of the employee only cost. Further, some California insurance companies allow employers to pay as little as $100 per employee per month. The employee would pay the difference and if you set up a Section 125, Premium Only Plan, the employee’s contribution can be pre-tax, which saves the employee (and the employer) a lot of money.
If you’re an employer, trying to determine whether you can afford to offer coverage; give us a call 800-746-0045 and we can help you out. There is no charge for our services – the insurance companies pay us when you sign up and you pay the identical rates signing up through BenefitsCafe.com as if you signed up directly with any insurance company. We can help you through the entire process and also throughout the entire time you have coverage.