Small Employer Health Plan Quality on Par with Larger Groups
Even with lower employee counts, small employer health plans are providing similar levels of quality and cost control as their larger counterparts.
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By - Small employer health plans can deliver similar levels of quality with many of the same cost controls as larger employers, according to new research from United Benefits Advisors (UBA).
A “less is more” approach can provide significant value to smaller employer groups, the study found. Even though larger groups can generally offer lower co-pays and deductibles, small employers can provide comparable health benefits and other employee advantages.
"While employers with 500 to 1,000 or more employees may indeed offer better coverage (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, flexibility, etc.," said Peter Weber, President of UBA in a press release.
"Small employers would do well to benchmark their plans against their same-size peers and communicate how competitive their plans are relative to average national costs, deductibles, copays, and more."
Small businesses were able to provide cost-effective prices for PPO, HMO, and consumer-driven health plans (CDHPs) based on the annual cost per employee across all employer groups.
When comparing the smallest employers to the largest employers, the average annual cost (AAC) per employee for plans with 500-1000 group beneficiaries was $10,777 for PPO plans in contrast to an annual PPO of $10,043 for groups with 1 to 24 members.
The same was true for the annual cost of HMO plans, which are generally low-cost coverage options offered to beneficiaries. HMO AAC for all employer groups was $8,886 - and $8,599 for the low employer group.
Larger employer groups had slightly better cost management for CDHP plans. The CDHP AAC for the 1-24 employer groups was $9,730, which was higher than the ACC across all employer groups at $9,319 per employee.
Mid-size employers between 25 and 99 employees had the lowest cost per employee across all plans, according to the survey results.
For example, the average annual cost per employee (all plans) is $9,727, but for small groups with 25 to 49 employees, the average cost per employee is only $9,165.
Even while saving on costs, the small groups also were able to keep premiums for employees around the same price as the large companies.
The large employer groups had lower average single-monthly premiums, but smaller groups were not far behind. The 500-plus employees group recorded average prices of $114 per month for single premiums, while companies with up to 99 employees recorded averages between $124 and $149.
However, smaller employers did lag behind larger companies with average family premium rates. Large employer groups offered families an average price of $352, while the smaller groups had average family premium prices between $472 and $591.
Small businesses have benefited from federal protections that allowed them to stay in low-rate plans, they are taking the right steps to save on health plan cost and provide their employees quality, concluded Weber.
“Keep in mind that relief such as grandmothering and the PACE Act helped many of these small groups stay in pre-ACA plans at better rates, unlike their larger counterparts," said Weber.
"Generally speaking, however, small businesses are not cutting corners with their coverage. Copays, deductibles, and HSA funding (when offered) are generally in line with average employers."
