What is Group Insurance?
Group Insurance health plans provide coverage to a group of members, either company employees or members of an organization. Group health members receive insurance at a reduced cost because the insurer's risk is spread across a group of policyholders.
How Many People Do You Need for a Group Health Plan?
When you buy group health insurance, you need to have a group. In other words, a single individual can’t sign up for this kind of plan however for small businesses it is required to have a minimum of four people in the group. You need 70% participation from your company’s employees to get group insurance and it doesn’t include owners or spouses.
Why Is Group Health Insurance More Affordable?
Group health insurance is more affordable because there are more people participating in it. The larger the risk pool, the lower the rates which is why it offers lower premiums than you typically see when looking for individual insurance coverage. To simplify it:
- Few people mean higher risks for the insurance company
- More people mean lower risks for the insurance company
- Higher risks cost more money to insure a group
- Lower risks cost less money to insure a group
As the pool of people in the group health insurance plan gets bigger, the cost of that group health insurance plan decreases. It’s the best way to get affordable insurance for employees, and to help employers afford to properly cover the people who work for them. It also helps cover employees who may not be able to afford insurance otherwise.
What is Considered a "Small" Employer for Group Health Plans?
In the context of a group health plan, a small employer is one that has two to fifty employees. Sole proprietorships with only one employee (the owner) aren’t eligible, and if you have more than 50 employees, you’re not considered small anymore. While small businesses aren’t required to give their employees’ health insurance, many of them want to offer it if it’s affordable to them.
How Does the Shared Cost of a Group Health Plan Work?
The cost of a group health plan is shared by everyone in the group, and by the employer and employees. In other words, these plans cost less because there are more people in them. Also:
- Employees pay a portion of their own health insurance premiums
- The employer pays a portion of the employee health insurance premiums
Employers who own small businesses should put most or all the cost of their group health insurance over onto their employees. It’s good business sense for getting and retaining talent if they pay a portion of the premiums. It shows the employees that their employers are truly offering them help with their group health insurance, and not just another option the employee has to pay for.
Can You Get a Tax Credit for Your Group Health Insurance?
If you offer group health insurance to your employees, you may be able to get a tax credit up to 50% of what you pay in. That’s a great way to be able to afford group health insurance, since it can be expensive. If you really want to give your employees group health insurance, but you’re not sure if you can afford it, tax breaks can really make a difference.
Can You Shop Off-Market for Your Group Health Insurance Plan?
When you shop off-market for your group health coverage you can work with me, your licensed insurance agent. It gives you several options that you might not be able to get on the exchange and opens coverage that’s available without subsidies or tax credits. It’s important that you know all your options so that you pick the best options for your company and its employees.