How Much Does Group Health Insurance Cost

Health insurance benefits are the second-largest expense after direct payroll (wages and salaries) for most businesses. Yet they remain one of the most powerful tools for attracting and retaining top talent. 

The challenge is that the group health insurance cost is not a single fixed number. It is a moving target shaped by business size, plan design, employee contributions and regulations.

In this article, the certified insurance agents at Fringe Benefit Analysts break down the current average cost of group insurance coverage. They also explain the key variables to help small and mid-sized businesses budget with confidence.

What is the average monthly premium for single and family group health coverage in the current year?

According to the most recent KFF employer health benefits survey, the average annual premium for single coverage under an employer-sponsored plan is approximately $9,325, or about $777 per month. For family coverage, the average annual premium is roughly $26,993, or about $2,250 per month.

These figures represent national averages across all employer sizes and industries and are commonly used as employer-sponsored insurance benchmarks. Actual premiums may be higher or lower depending on factors such as geographic location, workforce age, plan type and cost-sharing structure.

For budgeting purposes, many employers use these averages as a baseline estimate of health insurance cost per employee, then adjust based on their specific plan design and contribution strategy.

How does business size (small group vs. large group) affect pricing, underwriting and regulatory requirements?

Business size plays a major role in the small business health insurance cost. Small groups, typically defined as 1 to 50 employees in most states, are subject to community rating rules. This means premiums cannot vary based on individual health conditions. 

Rates are primarily influenced by age, location, tobacco use and plan type. This makes costs more predictable, but healthier groups may pay more than their actual risk warrants—many small employers shop through the Small Business Health Options Program (SHOP) marketplace or private exchanges.

Large groups, usually 51 or more employees, have more flexibility. They may be experience-rated, meaning claims history can affect future pricing. Large employers also face additional reporting and compliance requirements under federal law, but they often benefit from lower per-employee premiums due to risk pooling and negotiating power. 

In short, small groups get predictability, while large groups get flexibility.

What percentage of the premium do employers typically contribute versus what employees are expected to pay?

According to KFF, the average employer premium contribution is 84% for single coverage and 74% for family coverage. That leaves employees with a 16% contribution for single coverage and 26% for family coverage.

To put those percentages into real dollars, consider the current national averages. For a self-only plan with an annual premium of $9,325, the employer pays approximately $7,833 per year, while the employee contributes about $1,492 annually through payroll deductions. For family coverage with an annual premium of $26,993, the employer’s share averages $19,975, leaving the employee responsible for roughly $7,018.

How do different plan types (HMO, PPO, HDHP) and metal tiers (Bronze, Silver, Gold) impact the total premium cost?

The structure of health insurance plans is one of the biggest cost drivers.

• Health Maintenance Organization (HMO) plans tend to be the least expensive but limit provider choices and require referrals. 
• Preferred Provider Organization (PPO) plans offer more flexibility and broader networks, but premiums are higher. 
• High-Deductible Health Plans (HDHPs) usually have lower premiums but higher out-of-pocket costs, often paired with Health Savings Accounts.

Metal tiers also matter. 

• Bronze plans have the lowest premiums but the highest deductibles. 
• Silver plans strike a balance and are commonly selected. 
• Gold plans offer lower out-of-pocket costs but significantly higher premiums.

What specific strategies can small businesses use to lower their group health insurance expenses? 

According to the certified insurance agents at Fringe Benefit Analysts, raising deductibles or switching to HDHPs can immediately lower group health insurance premiums. Additionally, defined contribution models allow employers to cap their spending while giving their employees plan choices. Some businesses also explore level-funded or partially self-funded plans, which may lower costs if claims are low. 

Additional strategies include encouraging wellness programs to manage long-term claims, reviewing plan usage annually, comparing quotes from multiple carriers and enrolling through the SHOP marketplace to see if you qualify for the Small Business Health Care Tax Credit.

Conclusion

Group health insurance costs vary widely based on business size, plan design and employee contributions. Regardless, understanding averages and cost drivers helps employers budget effectively.