April 27


Group Health Insurance

By Edward Givens

April 27, 2020

Why are you considering a Group Health Insurance Option?

Attract employees: Is attracting talent to your business important to you?

Retain employees: How much is your turnover cost?

Increase employee productivity: How effective are healthy employees?

Would you like a more customized health plan option? How about setting a budget that works for both you and your employees? Would you like to take advantage of the tax benefits?

A Group Health Insurance Plan that is tailored to your needs can provide innovative solutions that will address the gaps in your current health plan and provide you and your employees with options that will protect their health, their income, and their families. 

In a small business health benefits survey,* a majority of small business owners reported several positive effects of offering health insurance for their employees:

  • 78% said it increased loyalty and decreased turnover.
  • 75% said it helped employee recruitment.
  • 64% said it increased productivity by keeping employees healthy.
  • 62% said that employees demanded or expected health insurance.
  • 58% said it reduced absenteeism by keeping employees healthy.

On the flip side, only 25 % of employers who did not offer health benefits responded that they thought not offering health insurance had no impact on their business.

*Source: Blue Cross and Blue Shield Association Analysis of 2002 Small Employer Health Benefits Survey, sponsored by the Blue Cross and Blue Shield Association (BCBSA), the Employee Benefit Research Institute (EBRI), and the Consumer Health Education Council (CHEC).

Is Group Insurance right for my business?

Small employer groups are defined as having between 2 and 50 employees for 50% to 80% of work days during the preceding year. The percentage varies by state. Further, eligible employees are defined by the ACA as working 30 or more hours a week and excludes part-time and seasonal employees. A maximum waiting period of 90 days was established for new employees to become eligible for coverage and guidelines were set for insurers when establishing new and renewal rates. Federal law further requires all plans sold to groups of 2 to 50 must be guaranteed issue, meaning groups cannot be turned down based health status. However, these small employers may be ineligible for coverage based on lack of employer contribution or lack of employee participation. 

Employees can enroll in a group’s plan only in certain situations. When a plan is newly offered by the employer, or if they are a new hire of the company and completed their initial waiting period. Employees also have an annual Open Enrollment Period allowing all eligible employees to join the plan, and, in certain situations, the employer may grant a Special Enrollment exception based on certain work or life events.

Group medical coverage is a single policy issued to a group (typically a business with employees, although there are other kinds of groups that can get coverage) that covers all eligible employees and sometimes their dependents. Individual medical coverage, on the other hand, is a single policy issued to a single person or family.

The are different rules for group coverage versus individual coverage, the insurer’s risk is calculated differently. Individual coverage has historically based its premium rates (or denied coverage) on the medical history of the person or family being insured. (The Affordable Care Act brought important changes to the individual market, including eliminating the ability of insurers to deny coverage based on preexisting conditions.) For small businesses, the insurer determines a premium price based on risk factors balanced over the entire group, using general information on members of the group, such as age or gender. Insurers are required by law to offer coverage to small groups.

Under federal law, small employers are guaranteed group coverage should they choose to purchase it, regardless of the employees’ health status. A “small employer” is defined as a business with 2 to 50 full-time employees. Owners are generally counted as employees, so sole proprietorships with one employee usually fall into this category, as do partnerships without any employees (by definition partnerships have two or more partners). Some states define the self-employed as “groups of one” and require insurers to guarantee issue them coverage in the small group market. (https://healthcoverageguide.org/part-one/group-coverage-basics/)

If as an employer you offer group health coverage to any full-time employees, you must offer coverage to all full-time employees. An employer has the option to offer coverage to part-time employees (defined as those working fewer than 30 hours per week). If an employer offers coverage to any part-time employees, all of them must be offered coverage.

These rules apply regardless of the medical condition of the employees. Any dependents of eligible employees are generally eligible for coverage under a group plan. Dependents include spouses, children, and in some cases, unmarried domestic partners. Dependents cannot enroll for coverage unless the employee has enrolled. Group insurance plans are required to extend coverage to adult dependents through age 26, according to the Affordable Care Act.

Employers can choose to pay the full premium or just pay a portion. The Affordable Care Act offers small businesses tax credits to help offset the cost of insurance. To qualify for a tax credit of up to 50% of premium expenses for any two years, small business owners must pay at least half of employees’ healthcare premiums and have fewer than 25 full-time-equivalent employees who earn an average of $50,000 or less per year.

Edward Givens

About the author

Working with me will allow you to have a healthcare plan that protects your health, your income, and your family. I'm a licensed health insurance adviser, entrepreneur, teacher, leader, and coach with 15 plus years of healthcare industry experience . I help small companies, professionals, individuals, and those eligible for medicare benefits design their healthcare plan to meet their needs and fit their budget. I'll be with you for the long haul. I'll assist you with education, selection, questions, and claims.

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