Group Health Insurance: “The BIG” And “The small” Businesses
Time to touch base on the BIG and the small companies that are interested in group health insurance. Lets just say there’s a BIG difference on how this could impact the different companies. To be considered a BIG company, it’s not a set scale on the amount of business you attract, or how man partners your company has. It’s all employee-count based. You’re considered among the BIG if your company has over 49 employees. On the contrary, the companies considered “small”, have less than 50 employees. A simple scale, but extremely important, as the new Health Care Laws have a play on how BIG businesses go about their group insurance.
“The BIG” – Large Businesses (50+ Employees)
As we discussed, in this category is a business with 100+ employees. The Health Care Law has touched base on most large businesses, but through major provisions and changes to the law, it will go into effect more significantly in 2016. Implementation of the laws will have their own and separate dates. Some may occur early on in the year, oppose to the others that are still being structured and will take affect late 2016.
Large companies lacking the knowledge of these laws will have penalties put against them. The most important thing to put to light with the large companies and the Health Care Law is that if they don’t offer a Group Health plan to their employees, they will get penalized. They will, as well, be penalized if the plans they provide is considered to be unattainable, or isn’t affordable. The penalties vary and is yet to be announced, but it may scale on how many employees are in the business.
“The small” – Small Businesses (1-49 Employees)
As we discussed, in this category is a business with less than 50 employees. These companies are considered SAFE! The new Health Care Law doesn’t target these companies at all, or at least “for now” that is. Although benefits to having group health insurance can be achieved on both sides as an employer or an employee of a small business, having group health insurance for small business is not a requirement in 2016. Only recommended.
Different Types Of Group Health Insurance Plans
In this post, we will cover the Top 5 Different Types Of Group Health Insurance Plans there are that’s available routes
for both the employers, and the employees to take…
- Co-operative
- SHOP Marketplace
- Individual Health Insurance
- Private Exchange
- Private Small Group Plan
Co-Op
There are plenty different structures to the Co-Op approach. For small groups, joining a co-op in the health insurance industry is a way more traditional procedure. The idea is the co-operative plans build the structure to buy, and spreads the risk to a larger group. All co-op’s typically have a different schemes, and are solely dependent on regional insurance underwriting laws and the co-op itself. Co-op plans fail to be stable most of the time, and the next option seems more reasonable to the future of Group Health Insurance.
SHOP Marketplace
This, by far, can be one of the better plan options for Small Businesses with typically under 50 employees, giving benefits both to the employer, and the employee with a structure that is solid and doesn’t easily collapse in government, or employer debts. The SHOP allows the employer and employee to have options in the Health Insurance Marketplace. While certain states have different criteria on the employer, if these requirements are still met on the behalf of the company, some can have the freedom to opt out of a group health insurance and stay with their individual insurance instead. In most cases, if an employer has 5 employees or less, %100 of the employees must be entitled to the group health insurance plan. If the employer has anywhere from 6 to 50 employees, the requirement is only %75 of the employees to be entitled to the group plan. This allows a bit of leeway when it comes to having employees that want the job, but aren’t interested in having a group plan, or pitching in for one anyway. While this option of having the SHOP Marketplace is new to group insurance, it isn’t far fetched from the options that were already available on the market.
Small groups that use the SHOP marketplace also have given access to tax credits. These tax credits are usually only accessed through the SHOP marketplace, and can be registered while consulting with a marketplace broker, just as brokers would with other private small group plans.
Individual Health Insurance
This is, by far, the most cost-effective plan for employers, allowing a set dollar amount to be given to each employee on helping cover their Individual Health Insurance. This gives employers the option of covering their employee’s premium taxes with set levels of coverage depending on the employee’s position in the company (Example: Managers get $250/month while entry-level workers get $110/month towards their desired health plan). This method is cheaper than small group loans, and may very well be the future of Group plans for small business owners if the ACA Platform continues to stay around.
Private Health Exchange
With this option, everything is simply said and set in stone as far as pricing, coverage, and options go. Plan options can be individual as well as group-based. One of the simplest routes for employers with a defined contribution strategy.
Private Small Group Plan
Purchasing a private small group plan is also still an option for small groups today. These plans come in wide-variety with a plethora of factors for employers and brokers to discuss while settling for a perfect plan between the company and the agency. Small groups may find more options and carriers to choose from on the private market as compared to the SHOP, where some states only have one or two plans to choose from. While having wide-variety, these plans are hard to come by when finding the right one.
Group Health Insurance Costs
Receiving health insurance through employers have become less and less popular with the rise of the Affordable Care Act (ACA), especially in the state of Florida. But a verge has settled in where Individual premium health care plans have steadily gone up over the years, causing them to be less and less affordable. This caused a few to take the risk of being uninsured for a few years of their life. Now with the big scare that approached in 2014, with the Tax Penalty, people are forced to be covered over the years as the Tax Penalty has become stronger and stronger (2016+ $695 per person [No More Than $2,500] or %2.5 of annual household income, whichever is greater). The Tax Penalty forces health insurance on some who cannot afford a plan, which is where group coverage can actually play a role, and has been over the past few years.
Group Health Insurance Rates Are Rising
Just like regular insurance, Group Insurance has steadily been increasing over the past few years as well. Since 2010, small business group costs have almost doubled in pricing, and has caused a toll on many businesses to reduce employee benefits which, in turn, decrease the benefits of working for the company.
Although ACA may be the pinpoint suspect in all the dramatic prices, the blame isn’t solely theirs to take. Statistics show that since the start of healthcare in the late 1990’s, all the way until 2013, that the costs for health insurance jumped x 1.5. The increase in price has been a thing of the past as well.
What Are The Costs of Group Health Insurance Policies Today?
The costs behind the scenes are a lot more pricey than most employees expect. Most employees only compare what they have to pay, they don’t see the huge cut most employers are giving them on the other end. With group health insurance, the risk is spread over the company. This means with a group health insurance plan, if more “life” happens among the employees (surgical needs, one going through pregnancy, chronic illness) the hit is taken as a team between the employer and the rest of the employees, and are more prone to seeing less coverage on their ends with a large premium rate increase.
Group Health Contributions
Below are averages from 2013 for employer Vs employee coverage for group health insurance policies.
Chart Pulled from Kaiser Family Foundation.
The Benefits Of Having Group Health Insurance
As an employer or an employee, you may be wondering what the benefits are to having Group Health Insurance as a possible option for your job or business. Well, as an employee, it’s simple. More coverage! Vision, Dental, Life, HMOs, PPOs, HSAs, Retirement plans ALL having some type of discount covered by the employer. As an employer, the benefits run a bit differently. The big one is “Attraction”. Employees love these benefits and if your competing company across the street didn’t exactly offer these benefits, you could be taking all their employees and getting all the “benefits” as well. Here’s a list of all the benefits you could include in a Group Health plan:
Vision Plans
Usually coming in expansion to a medical coverage plan, but can also be purchased separately, vision plans are one of the more basic coverage systems in health care. These plans act as a reimbursement for vision services. This system of insurance is made simple in a way where the doc is paid of beforehand, combined with a small copay from the visitor, then visiting an optometrist or ophthalmologist for quick and easy services such as eye exams, getting or exchanging your old pair of eye glasses, or getting new contact lenses.
Dental Coverage
This, as well, is generally an expansion to a medical coverage plan, but can still be purchased separate from a health insurance plan. This can cover either a partial, or full total on general dental procedures such as fillings, cleanings, x-rays, etc. Dental plans can cary heavily, from PPO and HMO plans with dental, to having oral surgery coverage, to having just the basic procedures covered.
Health Insurance
Without this, most potential employees won’t want a part of the program in the business. Health insurance usually has the highest costs, meaning, this is also where people want the highest coverage. It’s debatable at times to have group this within a group plan, as some employees might want to stay individualized with their own plans, but for the most part, it’s best to include this. Health insurance prevents the high risks of having medical expenses. These expenses usually have a high ratio of leaving people in debt, so it’s definitely an area worth having coverage on. There are plenty of different options and programs available on the market. It’s usually best to do some personal research on which plans would be best for your employees and choose a pricing plan with the programs to choose from like HMOs and PPOs etc.
Group Life Insurance
Life Insurance can be purchased on the group with a set limit for the group or set limits by job/class. The coverage is term, is reasonably priced and is available while the individual is employed by the company. While a Group Life program can be purchased stand alone, most employers will combine as part of the overall benefits package.
401K Plans
401K plans are a great way for employers and the owners to provide a vehicle to create a retirement income pool. Individuals contribute a percentage of pre-tax income into a qualified plan while they are working and later receive funds from the plan upon their retirement. The investment income accumulates tax free and the recipient pays income taxes as the funds are distributed, usually at a lower rate. Individuals can start withdrawals without penalty upon turning 59 ½. Many employers will provide a matching contribution based on a formula that may include company profitability.
Disability (Short and Long Term)
This type of insurance protects those who become disabled and are unable to work. Short-term disability insurance generally pays a percentage of a disabled employee’s salary for a certain amount of time after a short waiting period of 7-14 days. Each state has different guidelines and rules regarding short-term disability; some states require benefits be provided for up to 26 weeks. Long-term disability insurance is more popular among employers. If an employee is unable to work for a long period of time due to disability, this coverage will pay a part of the employee’s salary. The amount of money that an individual will receive often depends on their position and how much coverage their company provides. Many employers will provide both STD and LTD as complimentary products.
SHOP Marketplace Group Health Insurance
The small business health options or the SHOP Marketplace as it is commonly known is a program established by the Affordable Care Act. The program is designed to make it possible for small employers to offer group health insurance to all employees. The marketplace in most states is open to employers with 50 or fewer employees. In some states like New York, Washington, and Colorado the shop exchange also offers coverage to businesses with up to 100 employees. Through the SHOP marketplace businesses with less than 25 full-time employees with wages below $50,000 can get tax credits of up to 50% of employees’ premiums. These credits will, in turn, help employers pay their employees’ insurance premiums on the SHOP marketplace. The marketplace is also the only platform where individuals can apply for premium healthcare tax credits.
Group health insurance is basically a health policy taken by an employer and is offered to employees and eligible employees dependents. Unlike individual health insurance where an individual makes the decision on the right policy to purchase, employers make the decision on the best group health cover to purchase for their employees. The SHOP Marketplace is, however, unique in that employees can choose the health plans they think are best suited for them. A few months back the employee choice option was only available in some states but now employees in all states can choose their ideal insurance plan in the marketplace.
Group insurance in the past only made sense to large businesses. Small businesses with only a few members of staff opted to offer a health insurance allowance and let their employees make the decision on the best policy to purchase. Thanks to the SHOP Marketplace even small business owners can now offer affordable group insurance and make use of tax credits to considerably bring down the overall premium cost at the end of the day.
There are many advantages associated with health insurance purchased on the SHOP Marketplace. These include;
– The SHOP marketplace gives small business owners the purchasing power that only large corporations had a few years back when it came to health insurance for staff members.
– The marketplace makes it easy for employers and individuals alike to shop for the best covers they can get in the market. Self-employed individuals use the individual marketplace while employers use the shop exchange when purchasing an insurance cover.
– The marketplace is highly competitive which is good as getting great deals is easy.
– The content on the marketplace is easy to understand. People, therefore, do not need to get insurance agents to help them understand what each cover has to offer.
– Employers can apply for the SHOP coverage at any time of the year and the application can be completed online with relative ease.
Generally, the SHOP Marketplace is a great place for small business employers to get affordable health plans for staff members. Medium-sized to large businesses with over 100 staff members are expected to the able to use the marketplace anytime within the year. Currently, however, they can only use private brokers to purchase health insurance for their members of staff.