Health insurance benefits seem impossibly expensive. What am I missing?

★★★ signal-strong r/smallbusiness · ↑ 241 · 💬 166 · 2025-11-12 · kw: too much time · open on reddit ↗

Tool

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Issue

Small business owner cannot afford to offer competitive health insurance benefits; family plan for support staff earning $60K/yr costs $2,200/month ($26,400/yr), making 100% employer contribution economically unfeasible and 50/50 split uncompetitive with larger employers offering 100% coverage.

Cost

$26,400/year per employee for family plan; $2,200/month premium

Recommendation

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Date context

2025-11-12; comments reference recent 10-20% annual insurance premium increases over past 5 years

extracted with

anthropic/claude-haiku-4.5 · 2026-05-08

Body

Small business has 15-20 employees. Most are part time, and a few are full time. One part time staff has asked if we plan to provide healthcare benefits (plus vision and dental) at some point. She has a daytime / full time job where she is getting benefits currently and said she would like to come over full time if we can provide benefits. She says that her current employer "takes care of everything" and that she does not pay any contribution to the plan. So I said I will look into it. For her plus her spouse and child, the total monthly premium on a mid-level package is about $2,200 per month if I did 100% employer contribution. For context she is support staff making $29 / hr. For me it's too much of a stretch to justify at $26K annual benefits package for someone whose base is roughly $60K / yr. I could change the contribution rate to say 50/50, but then I'm not competitive with her current FT employer and I think the premium split at 50% would be prohibitive for her and her family anyway. So the question is: how do small businesses do this? I know there are a lot of options out there, but for those of you that have been down this road, what did you learn along the way? What was the best option that you settled on? I'd really like to offer competitive comp packages, but health benefits seem especially difficult. Thanks!

Top comments (6)

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[score=187] jediwashington

It's been a pain for sure. We only really take care of the employee near 100%, but then pass on full cost for spouses/children. No subsidies in our state, so the marketplace has always been trash, so we're in private market. Not sure why employers aren't pushing harder for healthcare reform as well at this point; it's a huge budget buster. We shop out our plan and our broker sends us dozens of options, so I know we're looking at the best rates out there; but I'm seeing annual 10-20% increases with decreasing benefit richness the past 5 years. That isn't sustainable, especially when I'm trying to keep pace with wages as well. I don't mind raising prices to keep up with it, but my business model is priced annually, so it can take some time to catch up. Some of this is population demographics. Boomers are using a ton of healthcare right now and at least where I am, the crane counts in town are almost all hospitals who can't build fast enough to handle the demand. But it's not like prices are going to come down once that slows.

[score=29] BizCoach

What you're missing is that having health insurance tied to unemployment is system that's bad for business owners, bad for employees and bad for the economy. I don't know what to do about your situation in the short term. In the long term, vote for politicians who support universal health care (care - not just insurance). It's good for the economy.

[score=33] junkit33

100% coverage is exceptionally rare. And even large percentage coverages often choose high deductible plans to keep the premiums down. > For me it's too much of a stretch to justify at $26K annual benefits package for someone whose base is roughly $60K / yr. You'll go crazy looking at it this way. Just average it out. You'd be paying the same $26K for somebody making $200K/yr, and you can't discriminate. Also, not everybody is on a family plan - individuals or spouse only are cheaper. And not everybody will take it. But yes, whatever you do, insurance is really fucking expensive. It is, however, a valuable and expected benefit, so if you don't offer it, you're competing with companies who do offer it for talent. That woman isn't looking at your job of $60K vs her other job at $50K or whatever. She's looking at your offer of $60K vs her other job at $50K+insurance, or more like $75K. So if you want to be competitive, either pony up more money or get the insurance.

[score=186] MrMoose_69

I bet you she does contribute at her other job, she just doesn't know it or is lying. My cousin didn't understand that he was contributing to his healthcare plan at Starbucks after working there for five years. Some people just don't look into things at all.

[score=66] [deleted]

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