What is group health insurance? You might think that a group health insurance plan and a family health insurance plan are the same thing. They are not. Sadly, the two types of insurance are easily confused. So to help sort out the differences, we begin by asking a few questions.
What Is Group Health Insurance for Small Businesses?
A group health insurance plan for small businesses is a health insurance policy that small businesses can offer to their employees. (A small business is defined as those businesses with less than 50 full-time or full-time equivalent employees.) This is different from individual health insurance that an individual may purchase as an individual or a family. Group health insurance plans may offer added benefits that are not available in individual plans.
One difference is that group health insurance can often cost less than individual health insurance because the risks are spread over the entire group of employees.
So group health insurance for small businesses is usually a single policy that covers the entire group of employees, and potentially their dependents. It may be less expensive than individual health insurance.
Are There Different Kinds of Group Health Insurance?
Yes. Typically, like individual and family health insurance plans, group health insurance plans may be broken down by plan type or by metal level.
- HMO: Health Maintenance Organization (HMO) plans typically require enrollees to pick a primary care doctor as their main point of contact. The primary care doctor may then refer them to specialists on an as-needed basis. When picking a primary care doctor, the enrollee is limited to doctors within the insurance company’s network. Medical care rendered by providers outside the network is often not covered (except in case of emergencies).
- PPO: Preferred Provider Organization (PPO) plans do not require you to pick a primary care doctor and generally give you more freedom to see the doctors you choose, though doctors outside of the insurance company’s network may be covered at a lower level than those in-network.
- EPO: Exclusive Provider Organization (EPO) plans combine some of the features of both HMO and PPO plans. You are generally not required to pick a primary care doctor with an EPO plan, but you may not have any coverage outside of the insurance company’s network of medical providers.
- Other: There are other types of plans available as well, such as Point of Service (POS) plans. There are also some plans that are eligible for use with Health Savings Accounts. When considering any plan type, pay attention to the covered services and how much you will be required to pay from your own pocket when you seek medical care.
- Platinum—Platinum plans usually offer the most benefits and are designed to pay 90 percent of projected health expenses for the average enrollee. They tend to have higher monthly premiums but may also have the lowest out-of-pocket expenses.
- Gold— Gold plans are designed to pay 80 percent of projected health expenses for the average policy holder and may include higher co-pays or higher premiums.
- Silver— Silver plans are designed to pay 70 percent of projected health expenses for the average policy holder and often have less expensive premiums than either Gold or Platinum level plans. While they cost less per month, they often have more expensive co-payments and deductibles.
- Bronze— Bronze plans are designed to pay the least amount of projected health expenses — only pay 60 percent of the average policy holder’s expenses, but they have more affordable premiums and may be a good fit for healthy people who do not require many visits to the doctor or other medical expenses, and do not want to pay a high premium.
Are Small Businesses Required to Offer Group Insurance?
While the laws are always changing, small businesses below 50 full-time equivalent employees generally are not required to offer group health insurance, so many do not. However, if you offer one full-time employee health insurance you will often need to offer health coverage to all of your full-time employees.
When health insurance is offered it often includes the employee’s dependents — spouse, children, etc. Eligible children may be covered to age 26.
Can Employees Pay Part of Their Premiums?
Yes. The employer can decide how much the employee’s share of health insurance coverage is, though the employer is generally required to pay at least 50% of an employee’s monthly premium. The breakdown must generally be standardized and not personal. For example, usually all middle managers should pay the same amount, and all entry level employees should pay the same. The cost should not target individuals or groups of people.
Where Can I Ask Difficult Group Health Insurance Questions?
Because the laws in this area are always changing, it is important to ask questions. That is why a good broker is beneficial to your business and your employees. Instead of fussing over group health insurance by yourself, talk with a broker about your unique situation. Remember, this article is only for general information and not intended to provide specific advice for your particular situation. You should always consult with a broker or other adviser that knows about your particular situation when making important decisions related to group health insurance.
Think about what kind of group health insurance you need:
- Do you need a package of health insurance options to help you retain your current employees, to use as an incentive to attract new talent, or do you need both?
- Do you have a diverse worker population and need different levels of group health insurance for different levels of employees? It’s common to offer more than one health insurance option for your employees to choose from. You may also opt to offer full-time employees different options than part-time employees.
- Do you have employees with special medical needs that require special types of health insurance?
A quality and qualified broker can help you sort out all of this by offering you group health insurance that works with your company structure.
Key Terms for Understanding Health Insurance
Here are some key terms associated with health insurance costs and coverage. Understanding what each term means might help you make the right choices in regards to your health insurance coverage.
Premiums — Premiums are the monthly costs associated with purchasing and maintaining coverage under a health insurance policy. Monthly premiums are typically split between the employer and employees.
Deductibles — An annual deductible is a set dollar figure that you are generally required to pay out of your own pocket before the insurance company begins to pay for covered medical services, such as doctor’s visits, lab work, or prescription drugs. Some plans have separate medical and prescription drug deductibles. It’s important to note that some preventive medical services may be free of charge to you, while others may apply toward your deductible or require co-payments.
Effective date — In general, the effective date is the date on which coverage begins under a new health insurance plan. This may be the date on which your new group health insurance plan comes into effect, or it may refer to the date on which a new employee or dependent becomes covered under your existing plan.
Choosing the best group health insurance for your small business is no easy task. It is beneficial to sit down with a broker and go over the need of your company. This review should include a discussion of company costs, plan options, employee needs, different tiers of coverage, and the cost to employees. One thing is certain, the language used in health insurance is tricky. A broker can help you see clearly and to also discover the best options. Also determine if you are going to include Disability Insurance.
This article is for general information only, so do not use it as a substitute for advice from a qualified professional who understands your specific situation.
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