Providence Insurance Group: Small Businesses See Big Hikes in Health Plan Costs

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Survey Reveals Group Health Plan Costs and Options by State and Industry

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In 2014, employers overwhelmingly utilized early renewal strategies to delay moving to higher cost ACA- compliant plans and keep increases in check

Providence Insurance Group, Health insurance premium renewal rates increased an average of 6.2 percent for all plans in 2015, up from the previous year’s 5.6 percent increase, according to new survey data released from United Benefit Advisors (UBA), the nation’s leading independent employee benefits advisory organization. Small businesses with fewer than 25 employees, which account for five million U.S. employers, were hit the hardest, finds UBA.

“In 2014, employers overwhelmingly utilized early renewal strategies to delay moving to higher cost ACA- compliant plans and keep increases in check,” says Les McPhearson, CEO of UBA. “These delay tactics ran out in 2015 and, as a result, these small businesses (that make up the majority of American businesses), were forced into higher-cost, community-rated ACA plans. Without the negotiating power of bigger groups or the protection from grandmothering, many small employers were left with no cost containment strategies other than reducing coverage.”

Nearly a quarter of Georgia’s small employers who offered group health insurance explored level funded plans in 2015. This new program was introduced by several major insurance carriers to avoid the high risk pool of community-rated ACA plans. “Our clients who qualified saved an average of 20% over the community-rated plans by electing this new strategy,” states Tyler Horton, Vice President of Providence Insurance Group in Georgia.        

Total costs per employee for the retail, construction, and hospitality sectors are 8.6 percent to 21.2 percent lower than the average, making employees in these industries among the least expensive to cover. Surprisingly, the finance industry eclipsed the government sector—the perennial leader in the highest costs per employee— and now pays, on average, $11,842 per employee, a 16 percent increase from 2014. Government plans still have the third highest average cost per employee ($11,817), yet employee contributions are 45.2 percent ($2,105) less than the average employee contribution of $3,333.

UBA finds that more than half (53.7 percent) of all employers offer one health plan to employees, while 28.7 percent offer two plan options, and 17.6 percent offer three or more options.

“The percentage of employers now offering three or more plans is of particular interest since it represents nearly a 28 percent increase over the past five years,” says McPhearson. “More and more, employers are offering expanded choices to employees either through private exchange solutions or by simply adding high-, medium-, and low-cost options, a trend we believe will continue to increase. Not only do employees get more options, but employers can introduce lower-cost plans that ultimately may attract enrollment and lower their costs.”

Contact Providence Group Health Insurance for a customized 2015 benchmark survey based on your industry, region, and business size.

About Providence Insurance Group

Providence Insurance Group is one of the nation’s leading independent employee benefits advisory firms with more than 450 corporate clients throughout the United States. Providence’s new PG50 platform is bringing our clients the best of both worlds: trusted benefits expertise and cloud based onboarding technology for new hires and open enrollment. Employers interested in obtaining powerful results from the shared wisdom of our affiliation with UBA should visit Providence Insurance Group. UBA empowers partner firms to pool their expertise, insight, and market presence to provide best-in-class services and solutions.

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Tyler Horton
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