How Much Does Group Health Insurance Cost in Tennessee

There is no Tennessee price for group health insurance. There is a published federal survey that reports what Tennessee establishments were paying in 2025, and there is a closed set of rules that decides what a quote for your particular group is allowed to move on. Those are two different things, and only the second one has anything to do with your company. This guide gives you both, keeps the qualifiers attached to the survey figures, and does not put a number on your business.

What the published Tennessee figures actually are

The Agency for Healthcare Research and Quality runs the Medical Expenditure Panel Survey – Insurance Component, an annual survey of employer-sponsored coverage. Collection happens at the establishment level, with the U.S. Census Bureau acting as the collection agent, and the sample is drawn from the Census Bureau’s Business Register and is, in the survey’s own words, “specifically designed to make national and state estimates each year.”

Tennessee has its own table. The current edition names itself in its first cell: “Table II. State of Tennessee, private-sector data by firm size, 2025.” The cells from the column headed “Less than 50 employees” are the ones that get quoted at employers, so here they are with the row labels they carry.

The row labeled “Percent of establishments that offer health insurance” reports 28.7%, with a standard error of 4.11%. The row labeled “Average total single premium (in dollars) per enrolled employee at establishments that offer health insurance” reports $8,365, with a standard error of 470.58. The row labeled “Average total family premium (in dollars) per enrolled employee at establishments that offer health insurance” reports $24,654, with a standard error of 1246.31. None of the three carries the survey’s own unreliability flag, which the publisher defines as “Figure does not meet standard of reliability or precision.”

Note what the premium rows are before anyone reaches for a calculator. They are total premiums, employer money and employee money combined, and they are per enrolled employee at establishments that offer health insurance. They are not an employer cost, and they are not a rate.

The three qualifiers that travel with every one of those figures

Strip any of these off and the figure stops meaning what it says.

The unit is an establishment, classified by the size of its firm. The survey glossary defines an establishment as “A particular workplace or physical location where business is conducted, or services or industrial operations are performed,” and defines firm size as “the total number of employees for the entire firm as reported on the sample frame.” A Tennessee jobsite belonging to a small firm is inside that column. A Tennessee jobsite of the same size belonging to a large national firm is not, however small the Tennessee location itself is.

“Less than 50 employees” is a survey band, not Tennessee’s legal test. They land close to one another, which is exactly what makes the difference easy to miss. The federal small-employer definition counts an average over the preceding calendar year, which a survey headcount taken from a sample frame does not replicate.

The premium rows count only establishments that offer health insurance. That phrase is printed inside the row labels themselves. Establishments that do not offer coverage are not in that denominator, which means the premium figures describe a population that has already made the decision you may still be making.

Why a Tennessee quote is not a lookup

Nothing above tells you what a carrier will charge your group, because a carrier does not price your group from a state average. It prices it from a short list of permitted factors, and the list is federal and closed.

Under 45 CFR 147.102(a)(1), a rate in the small group market may vary only by whether the plan or coverage covers an individual or family, by rating area, by age, and by tobacco use. Then paragraph (a)(2) closes the list in one sentence: “The rate must not vary with respect to the particular plan or coverage involved by any other factor not described in paragraph (a)(1) of this section.” Health status is not there. Neither is your claims history, your industry classification, or the size of the brokerage that submits the paperwork. The section applies, per paragraph (g), “for plan years (in the individual market, policy years) beginning on or after January 1, 2014,” and per paragraph (h) it does not reach grandfathered plans.

Age and tobacco are permitted factors inside federally capped bands. We name them and we do not print the caps.

Tennessee draws its rating areas on county lines

Of those permitted factors, geography is the one Tennessee’s own map decides, and it is the one employers most often get wrong about themselves.

Tennessee’s rating areas are drawn on counties. All 95 Tennessee counties appear on the CMS table of Tennessee geographic rating areas, each on exactly one row, each in exactly one area, with no county appearing twice. The table has a column headed “3 Digit Zip Code (if applicable)” and it carries no value for any Tennessee county, so there is no zip-code overlay sitting underneath the county map. It is counties, and only counties.

Which one applies to your group is then a federal question. 45 CFR 147.102(a)(1)(ii)(B) sets the small-group rating area “using the group policyholder’s principal business address,” and then defines that term: “the principal business address registered with the State or, if a principal business address is not registered with the State, or is registered solely for purposes of service of process and is not a substantial worksite for the policyholder’s business, the business address within the State where the greatest number of employees of such policyholder works.” It goes on to handle the network-plan case where that address falls outside the plan’s service area. One address governs the whole group, however many sites the group has and wherever the employees themselves live.

A caution on the vintage: the CMS page carrying the Tennessee county assignments stamps itself “Page Last Modified: 09/10/2024,” and it states no effective plan year anywhere on its face. It is CMS’s published record, and we attribute it that way rather than implying it is refreshed in real time.

What the county map does to Tennessee markets

Because the line is a county line and not a city line, the map does some things that surprise people who have lived here their whole lives.

Nashville is not a city sitting inside a county. It is the Metropolitan Government of Nashville and Davidson County, chartered under Tenn. Code Ann. § 7-1-101 et seq., and the municipal boundary and the county boundary are the same line — so no address inside Nashville falls in a different rating area from any other address inside Nashville. Clarksville, a separate city and a separate labor market in Montgomery County, sits in the same rating area Davidson does, so moving a principal business address between the two changes nothing about the geographic factor. A rating area is not a commuting shed, and distance from a metropolitan center does not enter it.

Knoxville’s area absorbs whole both of the county-straddling cities on its edge. Oak Ridge lies in Anderson and Roane counties and Farragut extends from Knox into Loudon, and Knox, Anderson, Roane and Loudon sit together, so a county line running through a city carries no rating consequence there. Chattanooga, in Hamilton County, shares its area with Franklin, Grundy and Sequatchie — counties the Tennessee Code assigns to the middle grand division while Hamilton sits in the eastern one. Which part of Tennessee you are in and which rating area you are in are different questions with different answers.

Johnson City reaches into Carter, Sullivan and Washington counties and is the county seat of none of them, and all three sit in one area, so an address anywhere inside the city is rated on the same geography. Memphis, in Shelby County, sits in an area it shares only with Fayette, Haywood, Lauderdale and Tipton, while Jackson, in Madison County, sits in the other West Tennessee area — so an employer with sites in both faces two different geographic factors without ever leaving West Tennessee, and the one that applies is settled by whichever address is the principal business address.

And then Spring Hill, where the boundary runs through the city. Spring Hill lies in Maury and Williamson counties, and CMS places those two counties in different rating areas. Two state sources agree on the split: the University of Tennessee’s Municipal Technical Advisory Service records the city’s counties as Maury and Williamson, and the Tennessee Blue Book lists Spring Hill twice in its municipalities-by-county section, once under each. We are not going to tell you which area a Spring Hill employer lands in. The determinant is that employer’s own principal business address, and two employers inside the same city limits can be rated on different geography.

Composite billing changes the shape of the bill, not the size of it

One more Tennessee-specific piece of the rating picture, because it changes what your invoice looks like and it confuses people who compare Tennessee paperwork to paperwork from another state.

Federal law builds a group’s premium per member. A composite, or average enrollee, premium method takes that same total and re-expresses it as flat per-enrollee amounts, so employees inside the same tier are billed alike regardless of their own ages. The rule permits this only on one condition, and 45 CFR 147.102(c)(3)(ii) states it plainly: it is allowed “provided that the total group premium established at the time of applicable enrollment at the beginning of the plan year is the same total amount derived in accordance with paragraph (c)(1) or (2) of this section, as applicable.” Compositing redistributes. It does not inflate.

CMS’s published state-by-state record shows Tennessee holding an authorization from CMS for a state-specific composite premium method. It does not show Tennessee requiring issuers to composite — that is a separate column on the same table, and Tennessee’s cell in it is empty. So the accurate statement is that compositing is not forced in Tennessee, and that where a carrier does offer composite premiums, Tennessee’s own authorized method is the one that governs how the tiers are built. The Tennessee Department of Commerce and Insurance published that method in a bulletin dated September 15, 2014, and CMS’s own footnote tells employers and issuers in states like this one to “check with the state department of insurance to assure understanding of the alternate composite method.” That is the right next step, and it is a federal source saying so.

Where the Tennessee small-employer line sits, and what CMS records

Two structural facts close this out, because both of them get asserted wrongly about Tennessee.

The small-employer boundary here is the federal line drawn by 45 CFR 144.103, by Tennessee’s own election. Here is the definition the election adopts, verbatim: “Small employer means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least 1 but not more than 50 employees on business days during the preceding calendar year and who employs at least 1 employee on the first day of the plan year. A State may elect to define small employer by substituting ‘100 employees’ for ‘50 employees.’ In the case of an employer that was not in existence throughout the preceding calendar year, the determination of whether the employer is a small employer is based on the average number of employees that it is reasonably expected the employer will employ on business days in the current calendar year.” That middle sentence is the ceiling federal rules let a state raise, and Tennessee said no in writing. The Department of Commerce and Insurance stated in Bulletin No. 15-01, dated October 22, 2015, that it “takes the position that it is in the best interest of Tennessee consumers and the insurance industry to adhere to the Federal definition of small employer and large employer, as cited above, and will not apply the State option.” CMS corroborates it from the other direction: its table has a column enumerating the states that have notified it they are expanding the definition, and that column names California, Colorado, New York and Vermont. Tennessee is not among them, so the federal boundary is the one in force here.

On the rating elections, read the same table the same way. Tennessee’s row carries no entry in the age-rating ratio, state-established age curve, tobacco-rating ratio or uniform family tier columns, in either market. Those columns are populated for other states, so the Tennessee blanks are meaningful. The honest phrasing is the one we have used throughout: CMS’s state-by-state table records no Tennessee entry in those columns. What that leaves standing is the federal default, which is the closed list of permitted factors set out at the top of this page.