Skip to main content

Employers Struggling to Cover Costs of Group Health Plans

Analysis  |  By Jay Asser  
   September 30, 2022

A survey of small to mid-sized businesses examines the pain points in employer-sponsored health insurance coverage.

Employers are challenged by the costs of group health insurance coverage and want another way to insure their workers, according to a survey by eHealth.

The online private health insurance exchange asked 1,300 people in September, including more than 1,000 general population respondents and over 250 owners and managers of small to mid-sized businesses, about the pain points of employers-sponsored coverage.

The findings reveal that employers and employees alike want something different than the typical model.

On the employer side, 51% of those surveyed say they are struggling to cover the costs of group plans, with 60% citing monthly costs as the single biggest challenge in offering insurance.

Though an additional 87% want another way to be able to insure employees without offering a group plan, 64% are unaware of individual coverage health reimbursement arrangement (ICHRA) plans as a solution. ICHRA allows employers to provide non-taxed reimbursements to employees for medical expenses such as monthly premiums and out-pocket-costs.

Meanwhile, 49% of employees surveyed say they were only given 1-2 plan options by their employers, with 58% answering their employer-sponsored plan options are not well aligned with their healthcare needs.

Freedom of choice is important to workers, as 74% of respondents say they would prefer to choose their own plan based on options in their area instead of the plans offered by their employers.

"Our survey suggests that many employers are unsatisfied with the standard group health insurance model – and many employees feel the same way," eHealth CEO Fran Soistman said in a statement. "I would especially encourage smaller businesses that just can't afford group health insurance to consider alternatives like ICHRA to control costs and give employees more personalized coverage options."

Healthcare costs for employers appear to be steadily increasing coming out of the COVID-19 pandemic as medical claims are on the rise.

According to recent analysis by financial services firm Aon, healthcare costs are projected to increase 6.5% to more than $13,800 per employee in 2023.

Traditional group coverage has been the norm for some time, but it's clear employers are getting frustrated and looking for new solutions.

“Our survey suggests that many employers are unsatisfied with the standard group health insurance model – and many employees feel the same way.”

Jay Asser is an associate editor for HealthLeaders.


KEY TAKEAWAYS

The online private health insurance exchange asked about the pain points of employers-sponsored coverage.

The findings reveal that employers and employees alike want something different than the typical model.


Get the latest on healthcare leadership in your inbox.