What Should You Know About Small Group Health Insurance?

You’ve probably been thinking about how to offer small group health insurance that meets your employees’ needs without it costing a fortune. You may have many questions about how the recent health insurance laws will affect your business, what kinds of group health plans are available, and how to apply for group health coverage. This article can provide answers to some of the frequently asked questions employers like you have about small business health insurance.

Do I Need to Have Employees to Buy Group Health Insurance?

It depends on if you want to buy health insurance for small business through an insurance agent or company, or through the Small Business Health Options (SHOP) Marketplace. Some states require that insurance companies offer guaranteed-issue group health polices to self-employed business owners with no employees. This chart from Kaiser Family Foundation shows states where a self-employed group of one can buy a guaranteed-issue group health policy.

To purchase a SHOP plan, you need to have at least one full-time equivalent employee. If at least one employee enrolls in the plan, you can then enroll yourself. A family member (including spouse), part-owner, or partner in your company is not considered an employee.

What Types of Group Health Plans Are There?

There a several types of small business health insurance plans for groups. You can choose from managed care (HMO, PPO, and POS), indemnity fee-for-service, and high -deductible health plans. Specific plans available vary by region.

Health Maintenance Organization (HMO): An HMO plan only covers medical services received at an in-network provider. All care is organized through a primary care physician (PCP). Patients must get a referral from their PCP if a medical condition requires treatment from a specialist. The only exceptions to getting a referral are for emergency room visits and routine, in-network care at an obstetrician or gynecologist.

Because HMO plans are more restricted, premiums and copays are usually lower than some other types of plans, such as a PPO plan. With lower employee premiums, you also put less money toward employer premium contributions. The chart below shows average employee premiums for HMO and other plan types reported from Kaiser Family Foundation’s\ Employer Health Benefits Survey.

Preferred Provider Organization (PPO): Comparing an HMO and a PPO plan, a PPO plan provides more flexibility because members can choose to visit an in- or out-of-network provider, and there’s no requirement to have a PCP. But the plan provides a lower percentage of coverage for going out-of-network. In addition to copays, PPO plans usually have coinsurance and annual deductibles. Patients may sometimes have to pay for care received out-of-network up front, and then file a claim with the insurance company to get reimbursed for covered medical services.

Point of Service (POS): This type of plan is a cross between an HMO and a PPO. The HMO aspect requires that patients first see their PCP to receive care and get a referral in some cases. The PPO element allows patients to receive some covered services at a provider outside the plan’s network, but this may require a referral from the PCP. With a POS plan, some medical services may not be covered out-of-network, and members may have to file all claims forms themselves.

Fee for Service (FFS): An FFS plan, also known as indemnity health insurance, lets members visit any physician, specialist, and hospital they choose. But this flexibility comes with higher out-of-pocket costs. The plan may pay healthcare providers directly or reimburse members for covered services after a claim has been submitted. An FFS plan can include a PPO option depending on the plan’s service area. By using a PPO provider, members typically have lower out-of-pocket costs, and they usually don’t have to file claims.

High Deductible Health Plan (HDHP): As the name reveals, members pay a high annual deductible for having this plan. The table below shows the average annual deductible for HDHPs and other plan types from the (KFF). To compensate for the high deductible, this type of plan usually has a lower monthly premium than other plan types. An HDHP in a small group health insurance benefits package is usually paired with a savings option (SO), such as a health savings account (HSA). An HSA is funded through pretax dollars that are automatically deducted from employees’ paychecks. Employees can use funds from the account to pay for out-of-pocket healthcare expenses.

What’s the Application Process for Small Group Health Insurance?

HealthMarkets is here to help. One of our licensed insurance agents will meet with you and each of your employees one-on-one to do a comprehensive needs assessment before you ever complete any paperwork to apply for small group health insurance. Our consultation service is free, and you’re never under any obligation to buy. Your agent will perform several functions, such as:

• Analyze your group health insurance costs: Your agent will perform a thorough cost analysis on what a group health insurance policy could cost your business and compare it to your current health plan, if any.

• Review options to provide you with the most cost-savings: For example, would a lower monthly premium and higher deductible be more suitable for employees? If so, then a high deductible health plan (HDHP) where you pay lower employer premiums may work best.

• Determine if you need to offer more than one heath plan: Depending on your employees’ diverse needs and your budget, your agent may evaluate if it’s practical to offer more than one plan option.

• Determine if and how you need to offer additional health benefits: Supplemental health benefits like dental and vision coverage are usually popular among employees. If employees are interested in such benefits, your agent might go over options to offer these benefits through a group plan, on a voluntary basis, or let employees buy their own individual or family supplemental health plan.

After your assessment is complete, your agent may review quotes for different plans available in your area that are most suitable to your needs and budget. Once you narrow down your choices, your agent will go over the next steps to apply for coverage.