If you’re a small business owner in Indiana, you’ve probably noticed that providing health insurance for your employees seems to get more expensive every year. On average, small business health insurance can cost $746 for single coverage and $2,131 for family coverage every month. And in Indiana, those costs tend to run even higher than in neighboring states.
So, what’s driving these rising prices, and more importantly, what can you do to keep your business and your team covered without breaking the bank?
Why is small business health insurance so expensive?
There isn’t just one reason behind the high price of small business health insurance—it’s a combination of factors that continue to push rates up year after year.
Rise in Medical Costs
The cost of medical services, prescription drugs, and hospital stays has increased significantly in recent years. As healthcare providers raise their prices, insurance companies must increase premiums to keep up with claims payouts. Unfortunately, that trickles down to employers and employees.
Insurance Provider Overhead
Insurance companies have their own costs to cover, including processing claims, managing policies, paying staff, handling customer service, and regulatory compliance. These administrative expenses are baked into your premium, increasing the overall cost of your plan.
Increase in Medical Service Utilization
More people are using more healthcare services than ever before, especially with the rise in chronic conditions like diabetes, heart disease, and chronic pain. As employees use more services, insurance claims go up—leading to higher premiums for everyone.
Small Business Size
Unlike large corporations, small businesses don’t have the benefit of a large employee pool to spread risk. If even one employee has high medical needs, it can dramatically affect your group’s overall rate. This lack of risk-sharing is one of the biggest reasons small business premiums are so steep.
Location
Unfortunately, in Indiana, healthcare costs are consistently higher than in surrounding states. This is caused by a few different factors, including hospital consolidation, limited price transparency, and a hidden “healthcare tax”. Overall, this means that Indiana small businesses are often paying more for less when it comes to health insurance.
What can you do about it?
While rising premiums can feel discouraging, there are several strategies you can explore to help manage your costs and still offer valuable health benefits.
Compare Plans & Options
There are a variety of health insurance options available to small businesses. Before deciding on a plan, be sure to consider all your options and find which one is best for your business and employees’ specific needs. While most choose and stick with the same plan and provider year after year, you may be able to find opportunities to cut costs by shopping around and comparing prices.
Consider Self-Funded Plans
Self-funding means your business pays employee claims directly instead of paying high monthly premiums to an insurance company. This option typically works best for slightly larger small businesses with healthier employee populations. Stop-loss insurance can help protect you from catastrophic claims.
Provide Employee Wellness Programs
Employee wellness programs like gym stipends, mental health services, and flexible schedules can help keep your workforce healthy, reduce overall claims, and improve productivity. Over time, this may help keep your premiums more manageable.
Utilize Government Programs
Depending on your size and income, you might qualify for different governmental programs. For example, the Small Business Health Options Program (SHOP) is designed to help small businesses with 50 or fewer employees afford health insurance options. There are also state and local programs in some areas that offer support or subsidies to small businesses offering employee coverage.
Yes, small business health insurance is expensive—but with the right tools and approach, you can make smart decisions that protect your team and your bottom line. By comparing your options, thinking creatively, and investing in employee wellness, you can take control of rising costs without sacrificing coverage.
Need help navigating your options? Reach out to a local benefits expert!
Please let us know if you have any questions. We understand that local companies have unique needs that most national firms don’t consider or struggle to identify. This leaves your people with a less effective, one-size-fits-all benefits plan. However, our ability to cater to the needs of our clients comes from decades of client partnerships. This perspective allows us to fully address unique needs and generate creative benefits plans.
You shouldn’t have to worry about just being a number, offering a generic plan, or getting the unique support you need. Call us today.
This Benefits Insights is not intended to be exhaustive nor should any discussion or opinions be construed as professional advice.