Group health insurance is almost always the largest line item in a small business's benefits budget. For most businesses with 5–50 employees, total annual health insurance spend runs between $60,000 and $500,000 — a range that reflects how much the cost drivers actually vary by business. Understanding what's inside that number, what you can control, and what you can't is essential for anyone making group health decisions in North Dakota or Minnesota.
National Averages as a Starting Point
The most widely cited benchmarks come from the Kaiser Family Foundation's annual Employer Health Benefits Survey:
- Single coverage: Average total monthly premium approximately $700–$750, with employers covering roughly 80%, putting the average employer cost at $560–$600 per employee per month for single coverage.
- Family coverage: Average total monthly premium approximately $1,950–$2,100, with employers covering roughly 70–73% — putting the employer cost at $1,400–$1,550 per family per month.
These are national averages. North Dakota and Minnesota tend to track near national averages, though regional carrier competition, network structure, and local health system dynamics all affect where specific groups land.
For a business with 20 employees where most elect single coverage and some elect family, total monthly premium spend (employer + employee portions combined) often runs $12,000–$18,000 per month — $144,000–$216,000 per year in total premium, with the employer typically covering $80,000–$150,000 of that amount.
What Drives the Cost for Your Specific Group
National averages are a reference point, not a prediction. Your group's actual cost depends on:
Plan type and tier: A gold-tier PPO with a $500 deductible and broad network access costs significantly more than a bronze-tier HDHP with a $3,000 deductible and a narrower network. Most small businesses in ND and MN land on silver or gold plans, with HDHPs gaining ground as a cost-management strategy.
Deductible and out-of-pocket structure: Higher deductibles shift cost from the premium to the employee's out-of-pocket responsibility. A plan with a $3,500 HDHP deductible has a lower monthly premium than a $500 PPO deductible — but your employees pay more when they actually use care. The total cost to employees can be the same or higher even if your premium line looks better.
Network design: Carriers that have negotiated tightly with a specific health system — Sanford in the Fargo/Bismarck markets, Essentia in Minnesota, BCBS in statewide roles — can often offer lower premiums than broad PPO networks. The tradeoff is that employees with existing provider relationships outside the network may face barriers or higher out-of-pocket costs.
Age of your workforce: Small group plans in North Dakota and Minnesota are age-rated. Older employees cost more to cover than younger employees. A business with an average employee age of 50+ will see higher premiums than a business with an average age of 30, even with identical plan designs. This is legally permitted age banding, not discrimination — it reflects actual health cost differences across age groups.
Industry: Some industries carry higher actuarial risk assumptions. Manufacturing, construction, and healthcare (where occupational exposures are higher) typically see higher small group health premiums than professional services or technology.
Claims experience: For very small groups (under 10 employees), individual claims can significantly affect next year's renewal pricing. One high-cost claim — a serious illness, a surgery, a NICU stay — can drive renewal increases of 20–40% for small groups. Level-funded plans, discussed below, attempt to address this.
Level-Funded Plans as a Cost Strategy
Level-funded plans have become one of the most discussed options for small businesses in ND and MN looking to reduce health insurance costs without dramatically changing the employee experience.
Here's how they work: instead of paying a fully insured premium where the carrier assumes all financial risk, you pay a fixed monthly amount ("level funding") that covers a portion of your expected claims, administrative costs, and stop-loss insurance. Stop-loss insurance protects you from catastrophic claims above a threshold. At year-end, if your claims came in below your funded amount, you receive a partial refund of the surplus. If claims exceeded the threshold, stop-loss insurance covers the overage.
The potential advantage: if your group is healthy, level funding can return 10–25% of your annual premium in the form of a surplus check. Over two or three years of good claims experience, the savings are meaningful.
The risk: if your group has a bad claims year, you don't see a refund (though stop-loss protects against catastrophic individual claims). Level funding introduces some financial variability that fully insured plans don't carry.
Level-funded plans are most appropriate for businesses with 10–50 employees that have reason to believe their group is healthier than average — younger workforce, industry with lower physical demands, employees with no known chronic conditions. They're not appropriate for small groups where one bad claim could dominate the numbers.
What You Can Do to Control Costs
Premium is only partially within your control. But several levers are worth using:
Benchmark annually: The single most effective cost-control strategy is shopping your group to multiple carriers every year. A carrier that was competitive three years ago may not be competitive today. Markets shift, carrier appetites change, and staying with a carrier out of inertia is one of the most reliable ways to overpay.
Adjust plan design: Increasing the deductible by $500–$1,000 can reduce your premium by 8–15%, depending on the carrier and plan. Pairing the design change with an employer HSA contribution (which the employee keeps) can make the higher deductible tolerable for employees while reducing your net premium cost.
Consider a two-plan strategy: Offering employees a choice between a richer plan and an HDHP gives employees autonomy and often shifts younger, healthier employees to the HDHP voluntarily — which can lower your overall average premium over time.
Implement a wellness component: Some carriers offer premium credits for documented wellness programs, biometric screenings, or tobacco-free attestation. The credits are modest, but they add up over time and can support a culture of health that reduces long-term claims.
The Cost of Not Offering Benefits
One figure rarely appears in the group health cost calculation: the cost of turnover. Replacing an employee who leaves because your benefits aren't competitive costs 1.5–2 times that employee's annual salary in recruiting, onboarding, and lost productivity. If your business loses two employees per year because of inadequate benefits and those employees each earned $55,000, your annual turnover cost is $165,000–$220,000 — far exceeding the employer cost of a group health plan.
The comparison isn't just premium vs. no premium. It's total cost of the benefits program vs. total cost of the turnover, morale problems, and recruiting disadvantage that results from not offering benefits.
To see how your current benefit spend compares to market benchmarks, or to get a fresh set of proposals, visit /employee-benefits or schedule a conversation.
Kain Carlson is an independent insurance advisor based in Fargo, ND, licensed in North Dakota and Minnesota. He works with owner-operated businesses across all three coverage pillars — commercial, benefits, and personal — under one advisory relationship. Schedule a review to see where your coverage stands.