Zane Benefits Report: Health Reimbursement Plans Cost Small Businesses 30-50% Less Than Group Health Insurance

Small businesses give an average $501 monthly to each employee to reimburse premiums and other medical expenses, the 2017 Annual Personalized Benefits Report shows.

SALT LAKE CITY--()--With affordable group health insurance difficult to find, small businesses have increasingly turned to health reimbursement plans, which cover 22 percent more of employee premium while saving businesses as much as 52 percent in benefits costs. This is a key takeaway from the 2017 Small Business Health Insurance Reimbursement annual report from Zane Benefits, the leader in personalized employee benefits for small business.

Under a health reimbursement plan, small businesses set aside a fixed amount of money each month to reimburse employees for individual health insurance and other medical expenses, rather than choosing a one-size-fits-all group plan and paying a portion of the premium.

Drawing on data from more than 15,000 reimbursement plan participants, the 2017 Small Business Health Insurance Reimbursement annual report analyzes how small businesses and their employees used these plans in 2016. It also examines how these plans compare to traditional benefits options, like group health insurance.

The report will be used by businesses looking to make the best choices when evaluating strategies to hire and keep their people. By showing a 45 percent increase in health reimbursement plan participation since 2015, the report clearly identifies the need for reimbursement options - including the new Small Business Health Reimbursement Arrangement (HRA), a new plan created by Congress in December 2016.

As an early identifier of these trends, Zane Benefits is committed to using their expertise to help small businesses eager to explore and take advantage of their health benefits options.

Key report findings include:

  • Small businesses gave an average monthly allowance of $501 per employee in 2016, across all states and family sizes – an 18 percent increase since 2015. By comparison, the average individual insurance premium underwent a relative change of 8.3 percent from 2015 to 2016, suggesting that small businesses respond to changes in the individual market when determining allowance amounts.
  • Employees in 2016 were reimbursed an average $435 each month, meaning they used an average 87 percent of their employer’s allowance amount. This suggests small business owners offer allowances that more than cover their employees’ health insurance costs.
  • Small businesses using a health reimbursement plan instead of traditional group health insurance save an average of 27 percent on single employees and 52 percent on employees with a family every month. At the same time, the average health reimbursement plan monthly allowance covers all of the average individual premium cost, while companies cover on average only 82 percent of an employee’s group health insurance premium.
  • U.S. states offering the highest average allowance per employee were Hawaii ($833), Rhode Island ($797), Washington state ($782), New Jersey ($745) and Alaska ($657).
  • Industries offering the highest average allowance per employee were religious institutions ($833), biotechnology ($715), consulting ($688), government ($636) and communications ($609).

Download the full 2017 Small Business Health Insurance Reimbursement report at for a deeper analysis of these trends and detailed considerations for small businesses.

About Zane Benefits

Zane Benefits was founded in 2006 with a mission to personalize employee benefits for small business. We envision a world where small business can compete with big business for the best people. We will realize this vision by personalizing the way small businesses hire and keep their people. Our solutions are simple, compliant, and personalized. We will know we have realized this vision once we are helping 100,000 small businesses succeed.


Zane Benefits
Amanda Giacobassi

Release Summary

Zane Benefits Report: Health reimbursement plans cost small businesses 30-50% less than group health insurance

Zane Benefits