Group health insurance is health insurance that offers coverage to all eligible people in a group regardless of their age or physical condition. Generally, one insurance policy is issued covering a group of people, usually comprised of employees. However, the group could also be comprised of people in unions, governments, clubs, church/religious organizations, trade associations, chambers of commerce, or special interest groups. In the U.S., group health insurance has generally been provided by employers, so it is thought of as being employer-based insurance.
Even if your company is small, you can still offer group health insurance. In most states, insurance companies who provide small group health insurance plans are required to accept any employer group of 2 to 50 employees, provided the employer agrees to offer enrollment to 100% of the eligible employees.
Self-employed health insurance is usually least expensive when established as a small group health plan. As few as two people – a husband and wife operating a full-time business, two or more owners of a partnership etc – can apply for a group health plan regardless their health status.
By reviewing the following information you will:
Know what is required to establish a small group health plan .
Understand the advantages of group health insurance
Realize the disadvantages of group health insurance.
Learn how to get online quotes for small group health insurance .
Know what information you’ll need when you are ready to apply.
What is required to establish a small group health plan ?
Each State has laws regulating requirements for small group health plans offered in that State. State regulators allow insurance companies some discretion in what they can require of employers to qualify for a small group health plan.
Some general guidelines are:
Usually, State insurance regulations define a small employer. In California, a small employer means a business with 2 to 50 full-time employees (30+ hours per week).
An employer is not required to offer a group health plan. Providing coverage is voluntary.
If an employer offers coverage, it must extend that offer to all full-time employees.
If an employer offers coverage to full-time employees, it may choose not to extend benefits to other family members.
Part-time employees (20-29 hours per week) may be offered coverage as long as all part-time employees are eligible to enroll.
Employers must pay some part of the premium, and insurance companies can impose minimum contribution requirements obligating the employer to pay, for example, at least 50% of the premium.
Insurance companies may also require that a minimum percentage of employees (such as 70%) enroll in the plan.
What are the advantages of group health insurance?
No Medical Requirements: By law, an insurance company must issue a small group health plan without regard to the health of the participants. This means that in cases where individual health insurance might be denied because of health problems (pre-existing conditions), that individual would be guaranteed coverage in a group health plan. There are no physical exams or extensive medical history questionnaires.
Lower Cost: The employer is offering a benefit and covers part of the employees’ health insurance cost. Because rates are based on a group of people, usually meaning less risk for the insurance company, coverage under a group plans is less expensive.
Reduces Payroll Taxes: The amount paid by employees for group health premiums is paid with pre-tax dollars, reducing their federal and social security taxable income by that amount. In addition, premiums paid by the employer are deductible, resulting in reduced total taxable payroll and payroll related taxes.
Additional Tax Reduction and Benefits: If the employer provides a small group health plan in the form of a Health Savings Account, additional tax and savings benefits may also be available. See our Health Savings Account information.
What are the disadvantages of group health insurance?
Coverage stops if you change or lose your job: One of the major problems with corporate downsizing and job outsourcing is the loss of group health insurance benefits. In addition, rising costs have force many small businesses to either not offer or discontinue group health plans. Those who are left without coverage and have pre-existing health conditions may have difficulty in buying individual coverage (know your COBRA and HIPAA rights).
According to a recent study, 50% of personal bankruptcies in the U.S. in 2001 were the result of uncovered medical bills. Many of those with health problems were not able to resume work at their previous jobs leaving them without health insurance and continuing medical expenses. Many were denied individual coverage because of pre-existing conditions (few know their HIPAA rights).
Lack of choices: A small group health plan usually offers only one option, generally a PPO (see our Types of Health Plans). If an employee has a favorite doctor who is not included in the health plan, they must either seek other care or pay higher rates for using a doctor outside the plan.
How do I get quotes for group health insurance?
A small employer can obtain online small group health insurance quotes based on all those in the company who could be covered by the plan. Because of strict state regulations regarding health insurance premiums, rates for a small group health plan online will be the same as those quoted from and agent or direct from an insurance company as long as the same information and start date are provided.
Small group health insurance quotes are available in one of three ways:
Instant Quote Online: You enter information about your employees, and then receive free health insurance quotes on several different plans and companies. Often you can apply for coverage online as these quote providers often operate an nation-wide insurance agency. Currently, one of the largest providers of online small group health quotes is eHealthInsurance .
A Quote through an Insurance Agent: This type of quote source matches your quote request with insurance providers in your area. When it finds a match, your information is immediately sent to them, they work up their best quotes and contact you with their rates, usually the same day. You are sent the list of insurance providers or who will be contacting you with their quotes.
This is a good way to get assistance with the process of choosing and implementing a health plan. A good insurance agent can help move the application process along more smoothly, and deal with the insurance company on your behalf completing all necessary paper work. A major site that provides quotes in this way is Insure Me . One of the best agencies for California small group health insurance quotes is Medicoverage.
Choose an Advertised Insurance Agent to Contact You: This type of site provides listings of insurance agents by state who specialize in the type of insurance coverage you are requesting. Most of these agents have web sites so you can review their information and select any from whom you want quotes. A top company offering this type of service is Insurance Finder , who also provides quotes from multiple agents as in the approach in #2.
It is suggested that you start with quotes from eHealthInsurance before contacting an agent. If you are seeking coverage for a small group (2 to 4 people) you may wish to apply online yourself.
With larger groups, it is a good idea to have an agent assist you. You can complete one form at Insure Me and receive competitive quotes from several agents in your area. Compare these quotes with those from Ehealthinsurance, and find out more about the agents offering you quotes at your state insurance department. The agent’s license number should be on their website or included with their quote.
You should have available the following information in order to get accurate quotes:
You will need to enter employee information on gender, home ZIP code, age, the number of family members enrolling, and in some cases on the spouse’s date of birth. This is what the premium costs are based on, so the more accurate the information you enter, the more accurate your quote will be.
You should enter ALL eligible employees, regardless of whether you think they will be applying for group health insurance. This is because some insurance companies take your total group size into account when determining if your company is eligible for certain plans. Not entering all employees may cause you to be considered ineligible for plans that you would be otherwise eligible for.
If you and your spouse are the only applicants, and you are both separately compensated, full-time owners, officers, partners, and/or employees of your company, and can verify this with officially filed state quarterly or annual federal tax documents, you may qualify to apply for group health insurance.
Any compensated owner, officer, partner, or permanent employee who works for the company at least 25 hours per week may be eligible to enroll. Employees who receive salary draws or a W-2 should be eligible. Lack of verifiable tax documentation may affect an enrollee’s eligibility, which in turn may affect the group’s eligibility.
What will I need to apply for a group health insurance plan?
Small businesses face an online-application process that requires the same amount of work as sitting down with an agent. If you choose to work with an agent in your area, getting an online quote will better prepare you and provide a basis of comparison.
Usually, you will be asked to provide documents such as State Quarter Wage Report, business license, or articles of incorporation to verify the legitimacy of your business
Give careful consideration to plan requirements: Do you want maternity coverage? Drug benefits? Dental insurance? What deductibles amounts? Add-ons increase the cost, so consider your budget.
Also know how much of the premium you will pay, and how much will be paid by your employees.