Small Employers’ Health Plans Competitive With Larger Companies’

Small employers, those with fewer than 100 employees, are doing a better job than larger companies at containing their health plan costs, United Benefit Advisors found in a survey. 

Employees at companies of all sizes pay an average of $3,378 toward annual health insurance benefits, but at small companies, they pay an average of $3,557. Employers of all sizes pay an average of $9,727 toward each employee’s annual health insurance benefits, but small companies pay an average of $9,474. Companies with 25 to 49 employees pay even less: $9,165.

United Benefit Advisors says the reason small employers are able to manage costs more effectively than larger companies is because of grandfathering and the impact of the PACE Act, which helped many of them stay in pre-Affordable Care Act plans at better rates.

Overall, 48.0% of employers are offering preferred provider organization (PPO) plans, while 44.1% of employers with 50 to 99 employees offer such PPO plans. Small employers are also largely following in the footsteps of all companies when it comes to health maintenance organization (HMO) plans (16.9% and 15.6%) and consumer-directed health plans (CDHPs) (24% and 30%).

“While employers with 500 to 1,000 or more employees may, indeed, offer better coverage—such as lower copays, deductibles, in-network out-of-pocket maximums and monthly premiums—small employers have a lot to offer employees when it comes to wages, purpose and flexibility,” says Peter Weber, president of United Benefit Advisors. “Small employers would do well to benchmark their plans against same-size peers and communicate how competitive their plans are relative to average national costs, deductibles, copays and more.” 

Generally, United Benefit Advisors says, small businesses are not cutting corners with their funding for copays, deductibles and health savings accounts (HSAs).

The downside, however, United Benefit Advisors says, is that employees working for small businesses must shoulder a much greater portion of the monthly premium, especially for families. Small businesses are passing nearly 6.6% more of the costs for single coverage and nearly 10% more of the costs of family coverage on to employees.

United Benefit Advisors’ full report, “Small Business Healthcare: How Employees Are Faring” can be downloaded here.