While 63% of employees report being really satisfied with their employer’s group health insurance plan, employers are looking for ways to reduce rising healthcare premium costs.
Choosing a group health insurance plan for your employees is crucial beyond monthly premium price tags.
As health insurance brokers in Houston, employers often search for ways to cut costs on their plans. But they’re often unaware of the hidden expenses riding the coattails of their existing plan.
To help you better understand these hidden costs and make informed decisions for the well-being of your workforce, we’ve put together some of the standard hidden costs of group health insurance plans in the following article.
How Much Do Employers Pay for Group Health Insurance Plans in Texas?
Business owners in Texas typically pay around $186 per employee they insurance on a group health insurance plan, as of 2024 data.
However, this price varies based on a variety of factors, including:
- Average employee age
- Employee gender
- Coverage provided
Top Hidden Costs of Employer-Sponsored Group Health Insurance
You’re not alone if you feel overpaying for employer-sponsored group health insurance. Employers expected a 7 percent hike for health insurance in 2024, with the average cost of coverage going up to $15,000 per employee.
But where are these costs coming from? Are there hidden fees tucked neatly inside your group health insurance plan?
Consider the most common hidden costs we see employers paying in Texas.
Admin Fees
Administrative fees for group health insurance plans in Houston can include:
Setup Fees—Plan setup fees are associated with the time it takes to set up your group plan.
Maintenance Fees—Ongoing administrative costs for managing the plan are also overlooked by many employers.
Premium Rate Increases
As we mentioned, annual premiums continue to climb and aren’t expected to decrease anytime soon. Even prescription medications are increasing thanks to inflation and other factors. Rising healthcare expenses and changes in the insurance market continue to take their toll on healthcare premiums.
Group plans with a higher number of claims also see higher premiums. The health status of covered employees directly affects the overall cost of insurance.
Compliance Fees
ACA compliance: In Texas, any employer with over 50 employees is subjected to the Affordable Care Act (ACA) requirements. Employers must offer at least one plan that is considered “affordable” by the ACA or face a penalty that is the lesser of either $3,860 per full-time employee receiving a federal subsidiary or $2,570 per full-time employee minus the first 30.
Contribution Costs
The portion of premiums employers must pay for their employees is called the “Employer Contribution,” which is up to 83% for self-funded insurance plans.
Dependent coverage is another fee associated with contribution costs. It is the additional cost if the employer contributes to the premiums of employees’ dependents. This adds to the fees of your group health insurance plan.
Health Reimbursement Arrangements (HRAS)
Funding HRAs can be expensive, but helping employees cover out-of-pocket medical expenses is good practice. Some employers pay up to $1000 extra per employee for their HRA. Fees for managing and administering HRA accounts can rack up costs.
Stop-Loss Insurance
Costs of purchasing stop-loss insurance to protect against high claims can also creep up on employers.
The excellent news is stop-loss premiums can be adjusted annually based on the previous year’s claim experience, changes in the employee population, and overall healthcare cost trends.
Premiums with lower deductibles cost more in premium fees, while the opposite reduces premium costs.
Network Adequacy
Higher costs due to limited network options are a direct result of Network Restrictions. These restrictions are bad for employers and employees. Any out-of-network care can result in unexpected group health insurance fees. Often, when employees switch physicians, additional costs are assessed.
HR Resources
Costs related to the time and resources spent by HR staff to manage and administer the health insurance plan can also surprise many employers. Know your plan options before getting bitten by an unexpected HR fee.
Wellness Programs
Costs of establishing wellness programs aimed at improving employee health and reducing overall healthcare costs can also contribute to annual healthcare costs. Depending on the benefits offered, you could pay around $150 extra per employee. However, those costs vary and could be covered if you keep your employees healthy.
Plan Customization
Tailored benefits cost more. Customized health plans are generally better for your workforce but can cost more. This is another critical area to discuss with a group health insurance broker.
Additional add-ons for benefits to enhance coverage can also spike premiums. The more customized your plan, typically, the more it will cost.
Deductibles
Deductibles vary in cost. You can learn more about the different types of deductibles, such as embedded and aggregated deductibles, to determine what you can expect to pay.
Copayments and Coinsurance
Hidden fees associated with coinsurance and copayments can significantly impact employers by increasing overall costs and administrative burdens. High out-of-pocket expenses for employees may lead to decreased satisfaction and lower utilization of necessary medical care, potentially resulting in more severe health issues and higher long-term costs.
How Primary Care Insurance Solutions Can Reduce Group Health Insurance Plan Costs
More than 153 million non-elderly people are covered under employer-sponsored insurance programs. Most workers contribute 17% of the premium for single coverage and 29% for family coverage. Where do your employees fall?
But there is hope for Texas employers.
At Primary Care Insurance Solutions, we work hard to find Houston-based businesses with lower premiums for their group health insurance plans. As knowledgeable brokers with over 30 years of experience, we know everything there is to know about negotiating lower premiums, identifying cost-saving opportunities, and ensuring compliance with regulatory requirements.
Find out how we can lower your group plan costs by contacting us for a quote today.
EN 
ES