Why Your Health Premiums Are Rising And What You Can Do About It
If you’re a business owner with employees or self-employed and buying your own coverage, you’ve probably noticed health insurance costs are climbing fast.
Premium increases are part of a national trend driven by rising medical costs, policy uncertainty, and shifts in health plan structure.
Let’s break down what’s happening and how you can respond smartly, especially with Open Enrollment now underway.
Why Are Premiums Rising?
Increased Medical Costs:
Care is more expensive overall, including hospitals, prescriptions, and diagnostics, which raises plan prices
Higher Employee Usage:
People use their benefits more often, especially after delaying care during the pandemic. This increases insurance claims and drives up renewals.
Administrative Overload:
Insurance companies are managing inflation, tech updates, and compliance regulations, all of which affect your premiums.
Risk Pool Shifts:
When younger, healthier individuals opt out or choose different coverage, a higher-risk group is left, which raises costs for everyone else.
Affordable Care Act (ACA) Subsidies set to expire:
Many employees, or even you, may rely on the ACA marketplace for coverage. In recent years, federal subsidies have helped keep those premiums affordable. Congress has not yet locked in funding for those enhanced subsidies. If they expire, premium hikes will hit millions of ACA users, including small business owners. Without those subsidies, you or your team could face unexpected health insurance costs in 2025.
How to Evaluate Your Health Insurance Coverage to Lower Total Cost
With Open Enrollment underway, now is the time to evaluate your coverage whether you're buying as an individual or offering plans to your team. Here’s what to consider beyond just the monthly premium:
[ ] What is the monthly premium vs. the out-of-pocket maximum?
A lower premium plan may cost you more in total if it comes with a high deductible and out-of-pocket max.
[ ] How much are co-pays and coinsurance for routine care?
Frequent doctor visits or prescriptions? Look closely at co-pays these can quietly add up over the year.
[ ] Will you likely hit your deductible?
If you expect significant medical costs, it may make more sense to choose a plan with a higher premium and lower deductible.
[ ] What’s the out-of-pocket maximum for your family?
This is the ceiling on what you’ll pay in a year for covered services very important for families with ongoing care needs.
[ ] Is the plan HSA-compatible?
If it is, you can contribute pre-tax dollars to cover medical expenses potentially reducing your overall tax bill.
[ ] Are you (or your employees) eligible for ACA subsidies?
Check income thresholds. A small change in income could mean the difference between a subsidized plan and a steep monthly cost.
[ ] Are you properly deducting your premiums or reimbursing them through a tax-advantaged structure?
This is especially important for business owners or sole proprietors paying out of pocket.
Does it make sense to shop around?
Open Enrollment is here and while it’s tempting to just renew the same plan you had last year, shopping around could save you thousands.
Every year, insurance carriers adjust plan pricing, coverage networks, and benefits. If you’re not comparing your options, you could be overpaying for coverage that no longer fits your needs. Here are are few items to look into when shopping around for better coverage:
Save on Monthly Premiums
Prices can shift even if your plan didn’t change. New options may offer similar coverage for a lower cost especially if your income or household size has changed.
Get Coverage That Matches Your Life
Did you add a new family member? Expect more medical visits? Planning surgery or specialty care? Make sure your plan matches your actual healthcare needs.
Unlock Hidden Tax Benefits
Some plans are HSA-eligible or better structured for small business deductions saving you money beyond just premiums.
Keep Your Doctors in Network
Networks change without notice. Reviewing plan options ensures your providers and prescriptions are still covered.
Tax Strategy Can Help Offset Costs
Whether you’re offering employee coverage or buying your own plan, you may be able to deduct some or all of those costs if structured correctly.
You may benefit from:
Health Savings Accounts (HSAs)
HRAs or Section 105 plans for small businesses
Pre-tax payroll strategies for employee contributions
Correctly classifying premiums as business expenses
Add premiums to your W2 for s-corporations owners to make it deductible
Your health insurance decision is one of the most important financial moves you’ll make before year-end.
Next Step:
Take 30 minutes this week to compare your options
Have your business pay for for monthly premium
Add a health savings account if you have a high deductible plan
Ask your advisor for correct tax reporting, so you can get full deduction for S-corporation.
