Health Insurance Costs in 2025: What Small Business Owners Should Expect

Whether you already offer coverage or are evaluating it for the first time, understanding the latest cost trends can help you budget more accurately and make smarter decisions for your team.

What Is the Average Cost in 2025?
Health insurance premiums typically range from $300 to $700 per employee per month for a standard plan. 

Why Are Rates Increasing?
Several factors are driving premium increases in 2025:

• Medical inflation continues to push up the cost of care, especially for inpatient procedures and emergency services.
  
  
• Prescription drug prices are rising, particularly for specialty medications used to treat chronic conditions.
  
  
• Expanded mental health and IVF benefits are now more common in employer-sponsored plans, which increases plan richness and base premiums.
  

Are There Ways to Control Costs?
Yes. Many small businesses are shifting toward strategies that offer cost predictability and plan flexibility. We recommend all businesses proactively evaluate their insurance options on a rolling, annual basis.

• HSA plans: Many businesses are choosing lower cost, high deductible plans that are a win-win for the company and employee. They’re spending less out of pocket in monthly premiums and rerouting the savings toward employee’s HSA - which is triple taxed advantaged.
• Level-funded plans Combines the cost control of a fully insured plan with the flexibility of a self-funded model with stop loss insurance.
• Small group plans: Allows a business of 2 or more employees to access company sponsored benefits. ‍
• PEO: It’s a model where the vendor bands together clients allowing a small business to access Fortune 500 benefits at discounted rates.‍
• ICHRA: Allows employers to provide a stipend to employees to purchase their own insurance plans on the ACA marketplace.

What Should You Do to Prepare?
Kick off the evaluation process early and conduct a full review of your current plan’s usage. A benefits specialist like ProHealth PEO Advisors can help compare all of these options or evaluate alternative carriers that best align with your goals. Consider offering several plans at different price points so employees can choose what works best for them.

Conclusion
Health insurance costs are going up, but that doesn’t mean you have to overpay or settle for a one-size-fits-all solution. With the right strategy and an experienced advisor, you can create a plan that balances cost with coverage and helps your business stay competitive in today’s market.