Group Health Insurance

Group health insurance is a policy purchased by an employer to provide healthcare coverage to eligible employees and their dependents.

There are three major types of group health plans, they include:

Health Maintenance Organization (HMO) – With an HMO plan, you must see doctors within your plans network or pay more for health services. You will need a referral to see specialists under this type of plan. HMOs are relatively affordable, compared to other plan types.

Preferred Provider Organization (PPO) – PPO plans allow you to see out-of-network doctors, but in-network providers will be less expensive. With a PPO plan, you don’t need to get a referral to see specialists.

Exclusive Provider Plan (EPO) – EPO plans combine the benefits of HMO and PPO plans. You will need to see in-network providers, but you don’t need a referral to see specialists. This plan’s costs fall between PPO and HMO plans, with PPO plans being the most affordable.

Traditional large carriers offer fully-funded plans, in which the employer pays a fixed premium to an insurance company. This arrangement transfers the financial risk and responsibility of providing healthcare coverage to the insurer. The insurance company assumes the burden of claims processing and takes on the risk associated with high-cost claims. While fully-funded plans offer predictable monthly premiums for budgeting purposes, it’s important to note that carriers often raise rates each year based on undisclosed factors. This type of plan is becoming less common among small businesses due to higher costs and limited plan options. However, for startups with fewer employees and potentially higher claims, a fully-funded plan may still be a suitable choice, allowing the insurance company to assume the associated risks. 

In a self-funded group health insurance plan, the employer assumes the financial risk by setting aside funds to cover employees’ healthcare expenses. While it offers cost-saving potential and flexibility, employers must be prepared to pay for claims without a cap on liability. While the “pay-as-you-go” approach is advantageous when employees file fewer claims, it can pose a risk in the case of catastrophic claims. Obtaining stop-loss insurance can limit financial exposure. Careful consideration and consultation with insurance professionals, like Weinstein Wealth Insurance Solutions, are essential for navigating the complexities of self-funded plans.

In a level-funded group health insurance plan, employers pay a fixed monthly fee into a claims fund (with a cap on costs) based on estimated claims, along with a third-party administrator (TPA) fee for benefits management. If claims exceed the cap, stop-loss insurance covers the additional expenses. Unused funds may be returned to the employer, providing budgetary security and potential savings. Consult with Weinstein Wealth Insurance Solutions for guidance on level-funded plans for your small business.

Professional Employer Organizations (PEOs) for comprehensive HR services and employee benefits, such as group health insurance. PEOs act as co-employers, sharing employment responsibilities and offering access to group health insurance plans. They leverage their collective client base to negotiate affordable coverage. However, working with a PEO means they become your employer of record, which limits control and transparency. The lack of flexibility and personalized service, coupled with being pooled with other businesses, may lead to higher insurance costs for relatively healthy companies. Consider these factors when deciding if a PEO is the right choice for your small business’s insurance needs.

The Small Business Health Options Program (SHOP) is available as part of the Affordable Care Act for companies with up to 50 full-time employees. SHOP plans offer flexibility, allowing you to choose medical and/or dental coverage, purchase plans directly or through a broker, offer single or multiple options to employees, determine premium contributions and dependent coverage, and set waiting periods for new employees. See if your business qualifies through an eligibility determination survey online or explore rates based on your company’s location.  

Group health insurance is generally not mandatory for businesses, but offering it can be a strategic advantage in attracting and retaining employees.

Yes, small businesses can qualify for group health insurance. There may be minimum participation requirements, but options are available to suit businesses of various sizes.

Group health insurance typically offers a range of coverage options, allowing employees to select the plan that best fits their needs.

Cost-sharing arrangements in group health insurance typically involve employees sharing the cost of premiums, deductibles, co-pays, and coinsurance.

In many cases, employees have the option to continue their coverage through COBRA (Consolidated Omnibus Budget Reconciliation Act) or similar continuation programs.

Employers often have the flexibility to choose from different coverage options and customize the plan to meet the specific needs of their business and employees.

Yes, group health insurance plans generally cover pre-existing conditions without imposing waiting periods or exclusions.

Dependents, such as spouses and children, are typically eligible for coverage under group health insurance plans.

It’s advisable to consult with an experienced insurance professional, like Weinstein Wealth Insurance Solutions, who can analyze your business’s needs and recommend tailored group health insurance options.