Determining the best course of action when it comes to group health insurance is one of the toughest decisions business owners must make. Just like personal health insurance, group health insurance can be found in all shapes and sizes to accommodate businesses of all magnitudes. In 2018, there have been a number of important updates that have changed the way many companies view their insurance options. Learn more about small business group health insurance, how it differs from other insurance options, and where you should acquire a group health insurance policy.
A Look at Group Health Insurance for Small Businesses
Both small and large businesses rely on group health insurance to provide their employees with the healthcare coverage they need. Small business group health insurance often costs less for participants than individual healthcare plans that provide the same benefits. As the risk that comes with this insurance is spread over a group rather than one person, the risk is significantly reduced. Under group health insurance, employees and possibly their dependents are covered when working for a company or organization that offers these benefits.
A good health plan is one of the top benefits people look for when applying for jobs. However, it is important to realize how small business group health insurance differs from individual coverage. With individual coverage, the insurer issues premium rates based on the detailed medical history of an individual or family. Things work differently with group health insurance. Under group health coverage, a premium price is determined based on various risk factors balanced over an entire group. Certain information is obtained to determine a premium, such as age and gender. For example, younger people are known to be healthier meaning a group of young employees will likely benefit from a lower premium.
How Group Health Insurance Works
Group health insurance for small businesses acts as a safeguard for you and your employees. The process of acquiring coverage is simple, starting with finding a plan that best suits your needs. Small Business Health Options Program, or SHOP, is one avenue that can guide you towards the right policy. SHOP, a federal marketplace that sells health insurance plans, is designed for companies that have 50 or fewer employees. You can also purchase health plans through various services or directly from an insurance company. However, it is wise to speak with a benefits consultant to ensure that you get the best coverage at the best possible price.
With group health insurance, the employer chooses the plan to offer to employees. The cost of the insurance premium is then split between the employer and employees. There is generally a minimum percentage rate that must be contributed to the premium by the employer. Know that when shopping for group health insurance, not all policies are the same. There are various carriers, types of plans, and coverage terms that must be considered. It is also important to note that there are laws that govern how coverage can be issued and these laws differ between large groups and small groups.
Coverage Requirements for Small Businesses
While offering medical insurance to your employees is an excellent way to attract new and valuable talent, small employers are not currently required to offer health insurance to employees. Most state and federal laws pertaining to health insurance are targeted at larger companies. However, you may be required to follow certain laws based on the number of employees you have, the type of business that you are in, and whether or not an insurance company is providing your company with coverage.
Why Employers Choose Group Health Insurance
There are a number of reasons small businesses choose group health insurance for their employees. Besides offering workers access to affordable healthcare services, group health insurance helps employees remain healthy and able to work efficiently. Health services like preventive services can help keep the risk of illness and disease low, while also encouraging participants to take control over their own health. Employees also do not have to deal with the burden associated with high debts that build during major illnesses or injuries. With group health insurance coverage available, employees are able to get the medical help they need quickly.
Small business group health insurance also comes with certain tax benefits. All expenses incurred by employers relating to health insurance are 100 percent tax deductible when used as business expenses. Another major perk of choosing group health insurance is better employee recruitment and retention. Companies that offer adequate medical coverage often report to having lower hiring costs, reduced absenteeism, and reduced risks in relation to poor health care among employees. Having access to benefits like health insurance can also enhance employee morale.
Updates for Small Business Group Health Insurance
This year new changes have been rolled out in regards to small business group health insurance. In June, the Trump administration took the final step to make health insurance policies more affordable for small businesses. These changes allow small businesses, as well as self-employed individuals, to come together based on their location and industry to purchase health insurance.
It also allows more people to purchase short-term coverage, as well as let employers offer cash in lieu of coverage. However, this move is expected to potentially weaken some consumer protections laid out by the Affordable Care Act (ADA).
Contact an Experienced Benefits Consultant
Many small businesses are turning to group health insurance to lower their costs and reduce their financial risks. Under federal law, small business employers are guaranteed group coverage if they desire to purchase it. Small employers are defined as those with between 2 and 50 full-time employees. As owners are also counted as employees, sole proprietorships with a single employee are also able to acquire group health insurance. Employers also have the option to provide coverage for part-time employees which includes workers who receive fewer than 30 hours per week. For more information about small business group health insurance, contact an experienced benefits consultant today.