Lewis & Ellis, LLC

The five most important things to know about employer group health insurance

Health Care and Health Insurance
by Brian Rankin
As employers, it's important to pick the right plan to support your staff and workplace.
As employers, it's important to pick the right plan to support your staff and workplace.

Most receive health insurance through their employer. According to the 2019 Census data, about 50% of insured people living in the country "receive health insurance coverage through group plans." Because this type of insurance takes up a large portion of the health insurance marketplace, most insurers offer some kind of group health insurance. As employers, it's important to pick the right plan to support your staff and workplace. Here are the top ten most important things to know about how to set up your company's group health insurance.

1. Understand what your employees need

For an employer who is picking group health insurance for their staff, there is much to consider. Even though it may seem simple, it's valuable to think about what would be useful to the group of people that work for you. Survey your employees to see what they value the most in a health insurance policy and work from there.

Ask employees about their preferences about things like deductibles or copay levels. These rates can be impacted by age, family size and financial situations. Let them know the available options and other offering interests like specific prescription drug plans or wellness programs.

According to Marathon Health, employees want their employers to bolster preventative care services, mental healthcare and for their healthcare providers to be covered. Regarding all employee benefits, working people agree that healthcare is one of the most valuable assets. The survey revealed that eight out of ten employees and seven out of ten employers report that this kind of insurance was in the top three most important employer-sponsored benefits.

Even though your goals as a business owner may be different from the goals of your employees, you can work with them to create group insurance plans that align with both needs. Employers need to take a look at premiums and health care costs for the company, while still ensuring that some of the employee requirements are met.

2. Compare different plans 

You want to ensure that you are comparing all the available options to get the best price and health benefits. This means taking into account all the pros and cons of all your choices. Put it in terms of overall business success and employee satisfaction.

Here are some factors that a business owner should consider when weighing the benefits and disadvantages of different group health insurance plans:

Attracting and retaining employees

For many working people, their health insurance coverage is one of the most important things about their jobs. According to a Gallup survey, one in six employees in America lists their health insurance as the main reason that they stay at a job that they may otherwise leave. This means that the choice in group coverage plays a big role in a business's staff retention rates.

Consider your taxes

In most cases, when an employer spends capital on health insurance, there are tax-deductible benefits available as a regular business expense.

For some health coverage options, it's valuable for small businesses to use the tax credits that are available to them through the Affordable Care Act. A small business is defined by the Census as one with revenue ranging from $1 million to over $40 million and with those that have 100 to over 1,500 employees. Business owners should keep this in mind when selecting a group health insurance.

Group health plan vs group health insurance

While the terms "group health plan" and "group health insurance" sound incredibly similar, they mean different things. Here are the main differences:

  • Group health plan is the term for all of the various types of employer-provided benefit plans that deal with healthcare.
  • Group health insurance is the same as employer-sponsored health insurance that provides coverage to employees.

3. How to manage risk with employer health insurance

One of the main concerns when selecting group health insurance is how to manage the risk, which is often associated with the costs of the employee benefit. This is why businesses implement risk management strategies to protect them from the potential of rising costs.

Access to Medicare is important for your older employees that are over the age of 65. This is an increasing portion of the workforce, with the U.S. Bureau of Labor Statistics predicting that about 25% of laborers will be older than 55. When someone in this age bracket chooses Medicaid over group health insurance plan, the business risk decreases. With the same idea in mind, The Consolidated Omnibus Budget Reconciliation Act (COBRA) is an important continuation health coverage option for some employees.

Another good way to manage risk exposure is to adhere to the new hire waiting period. Most employers require people who recently got hired to complete a predetermined period of time before they receive the health insurance coverage. The Kaiser Family Foundation reports that the waiting period is a common occurrence, with about 68% of covered workers facing a waiting period.

4. Know the advantages of group health insurance

We've already listed some employee benefits that group health insurance has for both the employer and the employee. However, it's valuable to understand what else your business can get from picking the right group of health insurance. Let's take a look at some of the advantages of group health insurance.

  • Lower deductibles: Because the employer is including a larger pool in the group plan, the risk becomes lower which improves insurance rates.
  • Gain tax credits: Your business could also qualify for the small business health care tax credit, as one example.
  • Higher employee morale: When a business owner provides healthcare for their staff, it boosts employee morale and can increase employee retention.

Group health insurance is popular for a reason; both employers and employees can reap the benefits from the right group health insurance coverage option.

5.  Understand different kinds of employer health insurance plans

While you can pick a good insurance carrier, there is also a variety of group health insurance to pick from. Let's take a look at some of the top options that employers can choose:

Small group health insurance

This is the ideal kind of group health coverage for organizations that have at least two full-time employees and not more than fifty. KFF reports that about 50% of all Americans have insurance through an employer-sponsored group health plan of some kind.

Health maintenance organizations (HMOs)

This is a popular option for businesses. The insurance company has reliable contracts with healthcare providers and specialists that give care to those who have coverage. Because this is predetermined, people usually like this option because it does not require a lot of paperwork.

Fee-for-service health insurance

Fee-for-service health insurance is more traditional. In this plan, the insured can pick whichever healthcare provider they want. This freedom of choice is both beneficial to the employer and the employee.

Health reimbursement arrangements (HRAs)

Instead of providing the reduced healthcare price, HRAs reimburse their employees for the their medical expenses and their own insurance premiums. One of the benefits of this option is that there is a predetermined budget that must be adhered to. Its less common to most employees, and may be more complicated.

Health stipends

A health stipend is not a kind of health insurance coverage, but some small businesses choose a health stipend instead. The option offers employees a monthly allowance for their healthcare expenses. This may not be an attractive option for most people who are seeking coverage.

Getting started

As an employer, there are many things that you have to juggle when it comes to employee benefits. Health insurance is among one of the most important to staff, and so it should be considered closely.

If you need help determining what the best option is for your needs, you can contact professionals to assist you. A group health insurance agent can guide you in the right direction in accordance with your business goals.

If you are ready to get started, reach out to the professionals at Lewis & Ellis today.



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