Health insurance costs climb for small businesses: 5 things to know

The average cost of health insurance for small-business owners is on the rise, according to a report from JPMorganChase. 

The report, published June 26, examined the cost of healthcare premiums for small businesses from 2018 to 2023. 

Most small businesses have no employees — but owners often purchase health coverage for themselves and their families and have seen higher premium costs in the past five years. 

For small businesses with fewer than 50 employees, healthcare premiums also rose, but overall payroll expenses rose faster. 

Five things to know: 

1. For small businesses without employees, health insurance premium costs rose 19% from 2018 to 2023. Premiums rose from 3% of average total operating expenses to 4%. 
   
   
2. For businesses in the 25th and 50th percentiles of spending on premiums, expenses remained relatively stable from 2018 to 2023. Among the top 25% of spenders, premiums rose to more than $1,000 per month. These changes reflect changes in plan selection, or the effect of increased subsidies, J.P. Morgan analysts wrote. 
   
   
3. Among businesses with 50 or fewer employees, monthly premium costs rose by 33% from 2018 to 2023. Total payroll costs increased by 42% over the same time period. 
   
   
4. Smaller firms tended to spend more on health insurance premiums as a portion of overall payroll cost than larger firms. For businesses with less than $600,000 in annual revenue, health insurance was 12% of annual payroll costs on average. For businesses with more than $2.4 million in revenue, insurance was 7% of annual cost. 
   
   
5. Health insurance as a portion of payroll expenses remained stable from 2018 to 2023. 

Read the full report here.