And what to expect in 2023

The good news? Employer-sponsored health insurance premiums have stabilized.
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The bad news? Most analysts predict a much bigger jump in 2023, costing businesses and possibly employees more for health insurance coverage.
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The grimmer news? Small employers are still getting the “raw end of the stick” so to speak when it comes to affordable health insurance that makes sense.
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The glimmer for the grimmer news? For super small businesses, small group health insurance may make more sense than shopping for health plans on the marketplace.
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As we round the final turn into the home stretch of 2022, thoughts may turn to health insurance plans for next year. Not as colorful and happy as sugar plum fairies or other harbingers of the season, yet important nonetheless, especially for small business owners offering health insurance for their employees. Health insurance premiums are important expenses for small business owners to account for, after all. And as you may suspect, we have good news and bad news. Let’s start off with the positive, shall we?

Good News for Health Plans: 2022 Stabilization of  premiums

What it means
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Despite the fact that health insurance costs have risen 4x the rate of salaries/wages over the last twenty years, 2022 actually saw a leveling out of health insurance costs. According to KFF, health insurance premiums and out-of-pocket expenses paid by workers only rose about 1-2% in 2022. This is a “historically low” figure in many ways, according to money.com. Additionally, premiums also stayed stable for employers who pay the majority of the cost for premiums.

Why it matters
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This is notable for a few reasons. Firstly, we have seen insurance costs increase rapidly in recent years, up to 20% more today than in 2017. However, it gets even more dramatic when we look at the increase since 2012: in a mere ten years, insurance costs rose by 43%. (Wowzer.) Not only did the rate of health insurance costs trail the rate of inflation, but it also trailed the average wage increase.
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A press release by KFF reporting on a recent study provided these stats and insight: The modest change in premiums this year (orange line) is unusual in that it is less than the increase in inflation (8% - dark blue line) or workers’ wages (6.7% - light blue line) during the same period. Even with this year’s minimal change, average premiums for family coverage have risen 43% since 2012 more than  inflation (25%) and wages (38%) over the same period.

Who picks up the bill?

Of course it matters to employees and employers both that costs for employer-sponsored health insurance remained stable in 2022. For employees, their costs have been a pain point for a while, especially with how quickly costs rose from 2012 to 2022 including health deductibles.
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The health insurance cost pain point was felt most by small employers who pay, on average, 35% more in monthly health insurance premiums than large companies. This easily adds up to $10,000+ extra per worker per year. No wonder small businesses, especially the smallest kind struggle to offer health benefits.

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We shared in our guide on looking for small business group insurance plans, “The U.S. Bureau of Labor Statistics reported in 2021, ‘Employers paid 78% of medical care premiums for single coverage plans and 66% for family coverage plans.’”  In many cases, employers have increased their percentage contributed toward health insurance premiums to keep employee costs relatively lower. Businesses have been absorbing the cost increases to maintain desirable insurance plans for their employees.

Many small businesses have simply stopped offering employer-sponsored healthcare plans, which likely costs them top talent (in existing employees and recruiting), employee wellbeing, employee morale, and even a loss of the healthy ROI from employer-sponsored health insurance. Of course employers and employees alike were relieved to see insurance costs stabilize in 2022. But that’s just the tiniest glimmer of temporary sunshine in a large cloudy-looking picture.

The Bad News: Predictions for 2023 Small Business Healthcare Coverage

While we’d love to cross our fingers and hope that insurance rates remain stable in 2023, the inflation trajectory suggests otherwise. In 2022, insurance costs trailed inflation for the first time in ages. Insurance and financial analysts warn that the increases are a-coming. In this case, inflation has taken longer to trickle down and catch up to medical care costs, although they are, indeed, catching up.

KFF President and CEO Drew Altman stated in their report, “This could be the calm before the storm, as recent inflation suggests that larger increases are imminent.”

Money magazine agreed, adding that “The premium hikes could affect the nearly 160 million Americans who rely on health coverage through their workplace.” That’s a lot of people—and employers—who can expect to get hit with above-average increases for 2023.

Take action

Although rising health insurance rates appear inevitable, it always makes sense for small business owners to review their group plans and make a switch to another plan provider if necessary. Here are some tips for employers on how to switch insurance providers. If you are wondering what to ask about when shopping for a new group plan or seeking to sign up for one for the first time, here are some helpful questions to ask your broker or potential plan provider.

From there, each employer must decide whether they will pay for a higher percentage of their employees’ premiums to keep costs stable for their workers and remain competitive in the job market or split the increases with their employees. Either way, providing employer-sponsored health benefits is still a crucial element in maintaining employee morale and wellness, recruiting top talent, and also encouraging increased productivity, according to recent studies. The ROI on employee-sponsored healthcare is also a big benefit to business owners.

Small Businesses with Under 10 Employees: Marketplace Plans vs Small Group Health Plans

Small businesses with fewer than 10 employees may think the options are so unattractive and unaffordable that they don’t even consider group health insurance. They’ve been piecing together health insurance coverage for themselves and their families on the health insurance marketplace. No doubt they’ve been a bit surprised by the size of the deductibles and the cost. (An $8,000 and even $12,000 deductible isn’t uncommon when evaluating private family health plans.)
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Before you “grin and bear” this impossible conundrum of insurance companies’ seemingly unaffordable monthly premiums and audaciously high deductibles, consider checking out Decent.
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We give small employers the size and scale they need to afford health insurance. GOOD health insurance with features you want like $0 medical deductibles and access to free primary care. All of our health plans are Affordable Care Act (ACA)-compliant so all the preventative care you’d expect is covered, too. For some small businesses, it may make sense to also look into IRS tax credits offered to small businesses, which could make small group coverage even more attractive.
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With year-round enrollment, what’s holding you back from getting a quote? It just takes a few minutes of your time. Contact us today at support@decent.com.
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