For many small businesses, offering a competitive health benefits plan to their employees can be difficult. This is especially the case when you have larger companies in your industry that are able to offer higher salaries and more comprehensive benefits packages. If you, as a small business owner, have found yourself stuck in this predicament, know that you’re not alone.
In fact, research conducted by the Kaiser Family Foundation (KFF) found that the smaller the company, the less likely that employees will be offered employer-provided medical insurance. Fortunately, when it comes to health coverage, there are options available that are specially designed with small employers in mind. One such option is known as small group medical insurance, or small group health insurance.
Continue reading to learn all there is to know about small group medical insurance, including what it is, which small businesses qualify, what a small group medical insurance plan covers, and more.
Small group medical insurance is exactly as the name suggests – a medical insurance plan that is geared towards small businesses who want to offer health coverage collectively to their employees and their dependents. In order to be eligible for a small group medical insurance plan, the employer must meet the following qualifications:
Since January of 2014, small group health plans are required to comply with the health coverage requirements set forth by the Affordable Care Act (ACA). This means that the plans must adhere to one of the four levels of coverage – bronze, silver, gold, or platinum. They must also cover the Affordable Care Act’s ten essential health benefits, which are as follows:
Although small group medical insurance plans do include vision and dental care for children, this coverage is not included for adults. If this is something that you want to offer your employees, these are usually offered as “benefit riders” and can be added to your group health plan for an extra fee.
Group medical insurance, whether it’s small group or large group, is a form of insurance coverage that covers a group of people who are a part of the same organization. In most cases, it is offered by employers as a valuable benefit to their employees. The group medical insurance can also be extended to the employees’ immediate family members and dependents.
One of the main advantages to group health insurance is the fact that members typically receive coverage at a much lower rate than individual insurance. Employers can also benefit from a variety of tax deductions, making group medical insurance plans beneficial for both employers and employees. As the name suggests, group medical insurance plans can only be purchased by groups. Individuals cannot secure coverage through group health insurance plan, unless they are a member of a group that it is being offered to.
Once a group medical insurance plan is purchased by an organization, the members of the group are given the option to accept or decline coverage. Depending on the plan and location, coverage may be offered in tiers, meaning insured parties can opt for basic insurance coverage or choose a more advanced option with add-ons.
If you qualify for small group medical insurance, there are a couple of different ways that you can go about purchasing a plan:
If your small business has fewer than 25 employees, purchasing a small group medical insurance plan via SHOP has a distinct perk. You may be eligible for the small business health care tax credit, which can help offset your contributions to your employee’s insurance premiums.
Unlike family medical insurance plans and individual plans, there is no fixed open enrollment period for small group health plans that control when you can enroll. This means that you are free to start shopping for a plan and purchase one whenever you want. Once you enroll in a plan, your premiums are usually locked in for a whole year. Though, you still are able to add or drop employees and their dependents at any point during that year. The premiums, however, will remain fixed until the plan is up for renewal.
After the year is up, you can choose to renew the previous plan or shop around for a new one. When the new plan beings, premium rates are renewed and group medical insurance plans nearly always experience annual rate increases each year, even if no changes are made to the plan.
Like large group medical insurance plans, small employers who purchase small group medical insurance must cover a portion of their employees’ premiums. However, the minimum required employer contribution will vary depending on the state and the insurance company. Regardless, small business owners can typically expect to pay at least 50% of their employees’ premiums on average. Then, your employees are responsible for covering the remainder.
If you prefer, most small group medical insurance plans will let you cover a much higher percentage and even pay for a share of the premium costs for your employee’s dependents. To help give you a general idea of what your contributions may be, the average annual group health insurance policy in 2020 was $7,470 for single coverage and $21,342 for family coverage.
It’s also important to not that, as a part of the Affordable Care Act, the current health of your employees does not influence the cost of group health insurance. This means that even if your employees have pre-existing health conditions or are considered to be “high-risk”, your monthly premium does not change.
According to the Affordable Care Act, many small businesses are required to offer a minimum value of medical coverage to their employees. However, this only applies to businesses that have more than 50 employees. In other words, if you qualify for a small group medical insurance plan, you are not legally obligated to offer a particular level of coverage.
Though, even if you are not legally required, most employees expect medical coverage to be offered by their employer. In fact, it is widely considered the top most requested benefit by employees and many would prefer health insurance over a higher salary.
Have more questions about small group medical insurance plans? The team at Taylor Benefits Insurance Agency can help! Contact us today to start developing the best plan for your small business.
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