Health Insurance Buying Guides

Individual vs Small Business Health Insurance: California Guide

What’s the Better Value – Individual or Small Business Health Insurance?

We get asked that question a lot from small business owners when it comes to both their own personal health insurance as well as whether or not their employees would be better off getting coverage from the individual health insurance exchanges.

To determine whether individual or small business health insurance is better, we looked at the cost, coverage, and network differences in individual vs small business plans to find which type of coverage offered the better value.

Small Business vs Individual Health Insurance

Individual vs Small Business Health Insurance – Which is Less Expensive?

In California, small business health insurance premiums are typically less expensive than individual health insurance premiums. Comparing the lowest cost PPO and HMO plans in San Francisco, Los Angeles, and San Diego:

  • Small business plans are 11-12% less expensive than individual plans
  • Bronze-tier PPO plans had a similar cost between both individual and small business
  • Small business plans are 16% less expensive than individual plans in the higher coverage tiers (e.g. Gold / Platinum)

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california-individual-vs-small-business-comparison-hmo

For more information about small business and individual insurance plans, you can find specific coverage & rate information at the links below:

Costs after Taxes and Subsidies

Both small business and individual plans offer tax benefits that help reduce the overall cost of coverage.

  • Small business plans are tax deductible, which reduces the cost of coverage by the business tax rate (typically 25-35%)
  • Individual plans receive a subsidy when you have a low income, typically at $44,000 per year or less. The lower the income, the larger the subsidy amount.

You would need to earn between $25K-30K/year in order to receive enough subsidy on an individual silver plan compared to a small business plan.

california-individual-vs-small-business-comparison-tax-impact
Individual vs Small Business Health Insurance – Which Has a Better Network?

Small business plans have much larger doctor and hospital networks, and provide access to many more specialist and top hospital systems. Individual plans, especially those on the Covered California exchange, are much more restrictive and limited in the doctor network.

Hospital Network Comparison

  • Anthem Blue Cross and Blue Shield of California have similar sized hospital networks for both the individual and small business plans.
  • HealthNet’s individual network includes much fewer hospitals than the small business network.
  • Kaiser Permanente has the same network for both the individual and small business plans.
  • Sharp uses the narrower Performance network for individual plans, while small businesses have access to the full Premier network.

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Doctor Network Comparison

  • Carriers with PPO networks like Anthem Blue Cross, Blue Shield of CA, and HealthNet have 30-50% fewer doctors in the individual network compared to the small business network
  • Kaiser Permanente has the same number of doctors in both the individual and small business plans.

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