Is Group Health Insurance Right for You?
Have Realistic Expectations
Many tiny employers (typically of 2 to 4 employees) spend excessive time and effort trying to implement a group health insurance plan. This is typically a result of unrealistic expectations. To discourage this sort of thing, we offer some considerations:
Do No Harm
A weakly supported group health insurance plan that is ultimately abandoned is usually worse than no group insurance at all.
As a small employer, you want to provide quality benefits for your employees. However, if you don't currently offer a group health plan, you may not be doing your employees a favor by inducing them to drop individual health policies in favor of small group health insurance to which you're not fully committed.
Don't be surprised by annual rate increases of 20% or more. If you're fortunate enough to get a great deal on small group health insurance rates, don't expect it to last. And don't expect your group health insurance rates to be less than what healthy employees would pay to buy coverage on their own.
Group health insurance almost always becomes a bigger financial commitment than anticipated by a small employer.
It's truly a sad thing when a small employer gives up on group health insurance. Because it often leaves some unfortunate employee(s) in a bad circumstance -- uninsurable with no affordable coverage options.
Restrictive Insurance Company Guidelines
- The employer must have at least two full-time employees.
- Proof of full-time employment is required. For documentation, most insurers accept the employer's last quarterly wage/tax report submitted to the state unemployment insurance department.
- Most group health insurers require at least 75% of full-time employees to either (1) enroll in the group health plan or (2) participate in their spouse's group health plan. In addition, most insurers require at least 50% of full-time employees to enroll in the group health insurance plan.
- Most health insurers require the employer to contribute at least 50% of the premium for employee health coverage, through they do not require the employer to contribute toward the cost of dependent coverage.
Clarify Your Purpose
Is your purpose to provide coverage for a very limited number of employees? If so, the employees may be better off with individual health insurance policies. MedPlan Access can provide individual and family health plan quotes for Illinois residents and for Indiana residents.
However, if you need to provide coverage for otherwise uninsurable persons or if you must offer employee benefits to retain and attract necessary qualified employees, group health insurance is probably what you need.
Less Costly Alternatives
For healthy people, individual health insurance almost always costs less than small group health insurance. Most people believe the opposite is true.
It is not unusual for coverage under the State high risk pool (Illinois Comprehensive Health Insurance Plan - CHIP, or Indiana Comprehensive Health Insurance Association - ICHIA) to be a less costly alternative to group health insurance for a very small business with unhealthy employees.
Barriers to Very Small Employers
Tiny group accounts (2-4 employees) are usually not profitable for health insurance companies, so some impose barriers by charging maximum rates and/or imposing difficult administrative requirements. In addition, many health insurers pay agents lower commission rates for very small accounts, which can make it harder to find a health insurance professional motivated to help you.
Health Savings Accounts (HSAs)
- The employee gets security with permanent health insurance that isn't dependent on a particular employment situation.
- The employee owns a tax-advantaged Health Savings Account (HSA) which they can keep if the employment situation changes.
- The employer provides a meaningful employee benefit which is a deductible health and welfare expense.
- This health and welfare expense is not subject to health insurance company rate increases.
If you'd like to learn more about HSAs, check out the HSA section of this site.
