Depending on the size of your business, as an employer, you may be required by law to provide qualified health insurance to your employees. However, employees who do not get health insurance through a job may be able to purchase an individual health policy. For individuals, families and business owners, health insurance premiums can be a large burden on one's expenses.
During 2017, in Michigan, health premiums accounted for 36% of an individual's median household income. Therefore, it is vital to try to seek out where you can save money and compare health insurance to find the best policy at the cheapest available price.
ValuePenguin along with Wellthie, a specialist in the small group health insurance industry, analyzed health insurance plans in Michigan to identify the difference in premiums for small group and individual health policies.
Individual health insurance plans on average are $271 more expensive per month compared to a small group policy premium
Individual health insurance is available for purchase through a state marketplace if you currently do not receive coverage through an employer or through a federal health insurance program like Medicaid. A marketplace policy is paid for entirely by the individual. Therefore, it is typically more expensive than a group policy, for which a person would only pay a portion of the total premium.
In the table below, you can notice these differences in health insurance premiums. For example, the largest discrepancy can be seen in Gold tier plans, which were 111% more expensive for individual policies compared to group health insurance plans.
However, you may be able to receive some premium subsidies on individual policies if your income falls below a certain level. You can see if you qualify through the Michigan health insurance marketplace.
Individual vs small group monthly rates
In this study, we have decided to use an employer-to-employee contribution ratio of 70%. This is an industry average for health insurance and means that an employer would be responsible for paying 70% of the monthly premiums, while employees would pay the remaining 30%. This is represented in the graph as the light blue (employer) and blue (employee) columns.
As you can see below, the employees will find that their health insurance costs will be significantly cheaper through small group policies compared to individual policies. For example, an individual Gold plan will be $605 more expensive for the employee compared to their share of the small group health insurance premium. Furthermore, on average, an individual plan will be 539% more expensive compared to the small group premium for the employee.
In Wayne, Oakland, Macomb, Kent and Genesee, employees will pay on average $518 less for their group health plan compared to getting health insurance through the Michigan marketplace
The gap between group and individual health insurance costs widens when analyzing policies in the most populated counties of Michigan. Across Bronze, Silver and Gold, an individual health insurance plan will be 137% more expensive than a group policy of the same metal tier. Platinum individual health insurance policies were not offered in the five largest counties of Michigan and thus were not used as part of the analysis.
Small group health insurance monthly premiums in 2019 reach $315 on average; 3% higher than the cost in 2018
Small business owners saw a slight increase in their per-employee group health insurance costs from 2018 to 2019. The largest increase occurred in Bronze health insurance group policies, which saw a premium increase of $18 per month, or $216 over the course of a year.
The least significant year-over-year change can be seen in Gold health insurance policies, which only increased by 0.46% since 2018. Employers should take note of this, as the most common policy offered in Michigan is the Gold tier health insurance plan — with an average of 121 Gold policies offered in each county.
2018 to 2019 health insurance rate increases
Deductibles for small group plans increased by 2% from 2018 to 2019
Besides premiums, deductibles can vary greatly depending on the tier. Furthermore, deductibles will have a direct effect on how much an employee will have to pay for health insurance. Therefore, employers should analyze deductibles and decide what will be valuable for workers. For example, with a high-tier plan like a Gold plan, employees will not have to spend as much money out of pocket and will instead gain access to coinsurance benefits more quickly.
The largest increase in deductibles occurred in Gold health policies, which spiked 12% year over year.
Deductible changes by metal tier
2019 individual and group health rates by county
ValuePenguin, in conjunction with Wellthie, researched and compiled quotes for both small group and individual health insurance policies from the state marketplace in Michigan. Wellthie is an online small group benefits marketplace that allows a business owner to connect and interact with many carriers and brokers. Here they can find a benefits program that can be tailored to their business needs. By being in sync with the small group health industry, Wellthie has in-depth knowledge and can provide some of the most accurate quotes available.
The quotes and plans in this study were generated from the 2019 plan year for a single individual and then averaged depending on the metal tier of coverage. For all employer-employee contribution calculations, an industry standard of a 70% contribution from the employer was used. In calculating the largest counties in Michigan, we used Census Intercensal County Population Data to determine which counties were the most populated.