Group health insurance provides health coverage for a select group of people. These types of health insurance plans are offered by many companies to their employers. Group health insurance plans usually cost less when compared with individual plans that offer the same type of coverage. To be eligible for this kind of coverage, your business should have at least two employees.
The reason that group insurance costs less than individual insurance is that the risk and the coverage are offered to the entire group. One of the main advantages of group health insurance is that the insurance is fully deductible if the cost of premiums is borne by the insurer, while benefit received by the group members is tax free.
If you are planning to buy group health insurance for your employees, here are a few things to consider:
Evaluating employer and employee contribution
Monthly premiums are the amount paid to the insurance company for coverage. This amount is shared by both employers and employees. You need to consider that an employer’s contribution does need to match their employee’s contribution. Employers usually contribute almost 70 percent of the amount in a group health insurance.
Employee policy preference
Employee’s preference for factors such as deductibles and copay levels are usually influenced by age, family size, their role in your organization, and their financial situation. Hence, consider doctors and hospitals that they would want in their network. Understand their interest in contributing to plans like prescription drug and wellness programs. A quick survey or a poll can help you determine the same.
More factors than just premiums
These types of health insurance plan include several other parts such as premiums, copayments, deductibles, and coinsurance. They cumulatively contribute toward a comprehensive group health insurance plan. A lower deductible usually indicates towards a costly premium. A deductible is an amount paid by an employee towards the medical expenses before the insurance kicks in. You also need to consider copayments that go along with the employee’s medical visits. Copayments add up if employees visit a doctor frequently.
Voluntary benefits
Employers can add choices in the form of workplace voluntary benefits without an increase in their expenses. Which means, they can offer vision and dental coverage with the usual group health insurance.
Now that know how to choose a group health insurance plan, following are the five main types that you can consider:
Small employer group health insurance
Companies that have less than 50 employees can buy this type of group health insurance. This type of health insurance offers standard coverage like primary health care and physical and laboratory examination. As a small employer group, you can also include annual claims benefits. Health insurance companies usually combine several small employers from similar industries into one large collective master policy, enabling employers to get coverage at more affordable premium rates
Fully insured employer
Under this type of group health insurance, the employer pays for all or a part of the insurance premiums. Ultimately, it will be the insurance provider who will be paying for costs of the benefits stated in the policy. However, the annual premium paid by the employer is fixed. Employees can also pay for a portion of premiums. However, the contributions may fluctuate on the basis of the number of participants enrolled in the plan.
HMO group insurance plan
Health Maintenance Organization (HMO) insurance plans are prepaid health insurance plans as it requires policyholders to pay for specific types of health services via monthly payments in advance. HMOs are comparatively cheaper than other group health insurance plans. Because they are cheaper, the health care services are also limited in an HMO insurance plan.
Self-funded health care
A self-funded insurance coverage offers an arrangement where the employer uses its own funds to cover their employee’s health care costs and other benefits. This type of group health insurance is in contrast to a fully insured group plan. The employer will also be responsible for administrative costs related to the self-funded insurance plan. Large-scale industries avail this type of plan.
Preferred Provider Organization (PPO)
These are a type of HMO or Health Maintenance Insurance plan. Under these plans, the policyholders are given more flexibility while choosing the network of doctors and healthcare providers. An important thing to consider here is, PPO group health insurance offers you to choose doctors who are not in the preferred list without forfeiting insurance benefits. PPO offers expensive copayments and extra health services.
Choosing a group health insurance for your new business involves a series of important steps. In addition to saving money, group health insurance gives your employees a chance to choose healthcare options that suit best suits their financial status.
