Everything You Must Know About Group Health Insurance

Medical insurance is a vital part of any business, regardless of size. For small businesses, medical insurance can be a challenge to afford, but many options are available. For larger…

July 14, 2022

Written by Nikki Grillo

Medical insurance is a vital part of any business, regardless of size. For small businesses, medical insurance can be a challenge to afford, but many options are available. For larger businesses, medical insurance can be more complex and expensive, but many options for affordable coverage are still available. 

This post will cover everything you need to know about group health insurance. No matter your business’s size, it’s important to find the right health insurance plan to protect your employees and your bottom line.

Why Is Medical Insurance Important? 

Medical insurance is one of the most important types of insurance people take. It helps people save a lot of money on medical bills, and it ensures that people get the healthcare services they require, even in emergencies, including extensive medical procedures.

When you take medical insurance, the insurer pays for a certain percentage of your medical bills, but you pay some money out-of-pocket (deductible). The amount the insurance company pays for you depends on the premiums you pay. Premiums are monthly amounts you have to pay to the insurer, and the more you pay, the lesser your deductibles will be.

What Are The Benefits?

Depending on the insurance company you choose, the insurance can cover surgeries, emergency care, home care, dental illnesses, ear and eye issues, gynecology treatment, medications, and vaccines.

While health insurance saves you money in the long run, it could be expensive to maintain, especially if you are older or have a severe illness. One of the ways you can save on your insurance is by having group insurance. Hoverer, before considering one, here are a few things to know about it.

What Is Group Health Insurance?

Group health insurance is a type of insurance that covers a group of people, usually those who work for the same employer. The employer typically pays some or all of the premiums, and the employees can use the policy to get health care coverage. 

Group health insurance plans can be either small group plans that cover 2-50 employees or large group plans that cover 51 or more employees. Group health insurance plans are often less expensive than individual health insurance plans because the risk is spread out over many people. 

The History Of Group Health Insurance

Group health insurance around the United States started in the 20th Century. According to the Affordable Care Act, a small group medical insurance plan can be given to a company or organization with 50 or fewer full-time employees. This means that any organization with 51 or more full-time employees qualifies for the large group medical insurance.

However, in California, New York, Colorado, and Vermont, they give small health insurance plans to companies with up to 100 full-time employees and large group health insurance to companies with over 101 full-time employees.

Why Is Group Health Insurance Important?

A few reasons why having group health insurance can be important for both employers and employees are: For employers, offering health insurance can help attract and retain good employees. For employees, having health insurance can help with peace of mind, knowing that they will be covered in case of an unexpected illness or injury. 

How Does Group Health Insurance Work?

Group health insurance works by pooling the resources of a group of people to pay for their collective healthcare costs. The premiums that each person pays into the plan go into a fund used to pay for medical care when needed. This can include doctor’s visits, hospital stays, surgeries, and prescription drugs. 

One of the benefits of group health insurance is that it can often be less expensive than individual health insurance plans. This is because the risk is spread out over many people, so the insurance company can afford to offer lower rates.

Member Participation

The group usually takes the group medical insurance plan, so individuals cannot purchase a plan for themselves through the group. For the insurance to be valid, it needs at least 70% participation from the members.

After the organization has chosen the plan, members can accept or decline the coverage. In many places, the plans come in tires, and members can choose to go with basic coverage or an advanced one with premiums.

Insurance Premiums

Depending on the plan, the premiums for the insurance are usually divided between the organization and the members. The insurance coverage might also be extended to the immediate family members or other dependents of the group members, but for added costs.

If you take a small group health and benefits insurance plan, you have to adhere to the Affordable Care Act rules set for small group and individual health care plans. Unlike when getting an individual health care insurance plan, the insurance company giving you the small group health insurance cannot use the medical history of the people in the group to set premiums.

Four Metal Levels

The premiums for older people are usually more than those of young people in the group but cannot be over thrice as much. The insurance plans also have to fit into one metal level. The four metal levels are:

  • Bronze plan: covers around 60% of the total medical costs.
  • Silver plan: covers approximately 70% of the total costs.
  • Gold plan: covering roughly 80% of the total costs.
  • Platinum plan: covers about 90% of the total costs.

The small group health insurance also has to cover the essential health benefits outlined by the ACA without a dollar limit on the amount the insurance will pay for a group member’s treatment. These important health benefits include:

  • Emergency services
  • Ambulatory services
  • Hospitalization
  • Mental health and substance abuse treatments
  • Maternity and newborn healthcare
  • Lab tests
  • Preventive care
  • Prescription drugs
  • Habilitative and rehabilitative services
  • Pediatric services

How to Obtain Group Health Insurance

The process of obtaining a small and large-group health and benefits insurance plan differs. If you want a small group plan, you can buy it at any time of the year through a private exchange or broker, an insurance company, or your state’s SHOP exchange. Most states, however, don’t offer them from SHOP exchanges; therefore, you have to research.

In many states, your insurer will have requirements for the number of employees who sign up for the insurance and the participation of every group member in terms of the premium payments. In small group plans, the insurer is the one who determines the premiums you will pay, and it is hard to negotiate.

Requirements

If you buy a SHOP plan, you might qualify for the Small Business Health Care Tax Credit. There is usually a one-month window between 15th November and 15th December every year. Insurance is usually guaranteed-issue even for small groups that don’t meet the contribution or participation requirements.

Other requirements you have to meet to get the small group health insurance plan include:

  • The annual salary for the employees in the group should be $52,000 or less.
  • Your business should have a Small Business Health Care Tax Credit approval.
  • The taxation should be equal to 50% of the premiums you will pay for the insurance.

Once the group members accept the coverage and the initial enrollment window closes, employees can still sign up during special enrollment periods triggered by qualifying life events or an annual open enrollment period determined by the insurer and employer.

Other Requirements

Newly eligible employees, like new hires or employees promoted to full-time employees, can also enroll as soon as they qualify at any time of the year. When applying for a large group health insurance plan, one of the requirements subject to the ACA states that all your full-time employees should be given full health coverage. This requirement formed in 2016 is also known as the play or pay rule.

Unlike in small group insurance plans, the premiums for large group insurance are negotiated by the insurer, broker, and employer, making it more flexible. The government requires fully-insured large group health policies to spend less on administration, profit, and marketing than small group plans.

Benefits of Group Health Insurance

One of the main benefits is that group health insurance plans are cheaper than individual covers. Health insurance policies’ average cost for many groups is usually $4,700 per employee a year. Employers pay around 80% of the total, and employees pay the rest.

They also offer additional coverage like vision, dental, and pharmacy as a bundle or separately. Some of the individual benefits of the plans include:

Small-Group Insurance

  • The business is given a health care tax credit, which you can use to offset your Health insurance costs.
  • The expenses related to the insurance were 100% tax-deductible.
  • It is more affordable than applying for an individual medical insurance cover.

Large Group Health Insurance

  • The rates are lower than those of small group health insurance plans because the insurance covers more people.
  • The employer can negotiate the premiums, making the plan more flexible.
  • Adhering to the large group insurance laws qualifies the business for tax breaks.
  • Large group health insurance plans cover more health and medical issues than small group insurance plans.

Alternative to Group Health Care Policies

One of the most common alternatives is government-sponsored Medicare insurance for unemployed or retired people. Small groups can also opt to self-insure instead of buying the ACA-compliant small group insurance.

Other alternatives include ICHRA and QSEHRA, which involve employers reimbursing employees for the self-purchased health insurance costs.

How Nesso Group Can Help

Every employer wants to ensure employees’ safety, so choosing the best health insurance plan is vital. Without a plan or program, it could be hard to establish health benefits for your employees, so Nesso Benefits is here to help. Our integrated services ensure that we help you understand and solve different issues in your company.

Our Nesso Group team of experienced and well-trained professionals, we’ll help you design a customized health insurance plan that benefits your company and employees. Don’t hesitate to reach out now to learn more.

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