Generally, I tend to talk a lot about that individual coverage, because most individuals don’t fully understand what their choices are, and what options they have as far as Marketplace, and individual private PPO goes. This week I wanted to talk a little bit about group coverage. Let’s say you are a small business owner. You may or may not have any employees, it may be just you and your spouse. If you are a small employer, it can be difficult to do group benefits because the group benefits have certain requirements that you will not be able to meet. And as an Austin group health insurance expert, I am able to assist you.
I usually find that there a two camps of people – one camp understands what group benefits are and realize that they need individual coverage for themselves because they know they will not qualify for a group plan, and the other camp are people who truly do not understand group benefits, what a group policy is, and how group pricing works. Most people I come into contact with tend to think, “oh, I have a small business, I want to offer insurance. Let’s make a group”. It is not as simple as that, as the insurance companies have rules which they put in place, rules which need to be met in order to get the group price.
Some of the rules pertaining to group policies include having a minimum of two W2 employees that are not married, participation requirements, or other coverage requirements. Participation requirements are rules the insurance companies put in place to make sure that this group is being offered to all W2 full-time employees – this benefits them since they can only make money on the number of people who participate. If you do have employees who receive coverage from their spouse, you will be able to get them to sign a waiver explaining their other coverage, and why they are not taking the group coverage. If they want to join the group plan in the future, they are also able to do that. Participation in the group from your employee base is important for you to evaluate, as the insurance company is going to base your rates on age and eventually on claims filed. An example of this is if you have an older employee population, your rates are going to be more because they’re probably going to file more claims. This means you’re going to have bigger increases each year, as opposed to, a younger employee population where they may not file as many claims or may not even use their insurance very much.
Another aspect of group insurance that is not often taken into account by small business owners, is that a true group policy is considered a major medical benefit, and you, the employer, are required to pay 50% of the employee price. That is a commitment by the employer. An advantage to offering group benefits to your employees is that you can offer a PPO, which is not available in the individual Marketplace.
However, if you have a small group, the pricing may not work out better than individual Marketplace plans because a small group has small demographics to pull from when insurance companies calculate rates. Generally, if you are under 10 employees, an option that exists as a small business owner is to not offer a major medical plan as an employer. Your employees, depending on their salaries could qualify, especially now in today’s market, for subsidies and that may actually be less expensive for the employee to get coverage through the Marketplace. The drawback is they don’t get a PPO this way. They can get an EPO or an HMO, and the employer can’t pay for any of that plan. But what they can do is give employees a salary increase and allow them to seek their own coverage. So, in this case, I would still be your broker for your employees. There are other benefits we can put in place, even if you are not offering major medical benefits. We could consider making a group as far as supplemental coverages or maybe dental and vision coverages go.
My role as An Austin group health insurance expert is to act as a broker. When I sit down with an employer, we talk about goals. I explain that a group policy really is major medical coverage. And then we figure out the best course of action for their business and for their employees. My goal is to make sure people get the best coverage they can get at the best affordable price.