In November of 2018, amidst the ever-rising cost of individual health insurance, Pam and I sat down to answer a common question we get from our clients, now one that we ourselves faced: does our business qualify for group health insurance?
The simple answer, YES. Our Independent Insurance Agency, though a mixture of W-2 employees and 1099 contractors, had at least 2 full-time employees willing to enroll in group health benefits. After years of hard work to grow Redline Health, Pam had reached another milestone in a small business’s journey and decided to offer group health insurance to the agency.
What is group health insurance?
Group health insurance is simply major medical insurance for a “group” of people, typically a business or organization. Insurance coverage purchased in this manner is usually less expensive compared to individual or family insurance since the insurance carrier can spread risk across a larger pool of people (your group).
How do I qualify to offer group benefits?
On the most basic level, you only need 2 full-time, non-related employees (or owners) to qualify for a group plan, but there are several factors that go into that equation.
First, you need to determine how many full-time (and full-time equivalent) employees you have and how many will be applying for coverage under the new group plan. While any group of 2 full-time employees or more could be eligible for group coverage, most carriers will require your group to maintain a certain level of employee participation to remain effective. Basically, if enough employees do not enroll or stay on the group health plan the following year, your coverage could be termed for lack of participation. Always seek advice from your agent as to what participation requirements might be needed in your situation. Some employees are unaware of how group insurance can benefit them, so don’t be afraid to ask your agent for help when speaking with your team. It is the job of your agent to help you and your employees understand the total benefit package.
Next, find a reputable agent (more on that later) in your area to walk you through plan options available to your business. Each company can be treated differently by insurance carriers based on a number of things, including industry, location, and total employee size. Finding an agent that can guide you through these possible hurdles is invaluable.
Finally, you will be ready to offer a new group plan! During this phase, make sure to ask your agent about pre-taxing benefits (saving money for both the employer and employee) and how it impacts your group offerings.
Is group coverage REALLY better than individual/family options?
Absolutely! As discussed above, your rates for insurance coverage are based off several criteria, one of which being the number of people applying for coverage. Insurance by nature is a business of hedging risk, so when an insurance carrier (Blue Cross and Blue Shield, QualChoice, United Health Care, etc.) can spread the risk of catastrophic losses across more people, you benefit by having a reduced premium. In addition to having lower overall premiums with a group plan, carriers are also able to offer richer benefits per dollar for group health plans (ie. lower deductibles, lower copays and out of pockets, and lower co-insurance options) compared to similar offerings in the individual market. When you offer group insurance, not only do you win as an employer, but your employees win with better coverage for their hard-earned dollar!
Though most of this post deals primarily with major medical coverage, the same principles apply to all group benefit offerings. Dental, vision, and life insurance all benefit the employee and employer with more robust offerings and better premium when written as a group policy.
When can I enroll my business?
Anytime, brother (read in Hulk Hogan’s voice)! Unlike individual insurance through the marketplace, the Affordable Care Act places no limitations on when a new group can sign up for insurance. As long as your business has 2 full-time employees (can include the owner) that are willing to enroll, you may qualify for group insurance.
How do I find a competent agent/agency?
Call Redline Health, duh. But all joking aside, that is a question not easily answered.
Do you select an agent based off which carriers they represent? Maybe. We know several great group agents, and honestly, they are all contracted with the Big 3 insurance carriers in Arkansas: Blue Cross and Blue Shield, United Health Care, and QualChoice. Any REAL group agent will be able to quote any of these 3...if they can’t, RUN!
If not by carrier, do you pick an agent based off whether they utilize an electronic enrollment system? This is a whole other article coming soon, but that answer is again, maybe. Yes, enrollment platforms will make your life (and more dramatically, the agent’s life) easier when it comes to typical day to day processes, but it does have its drawbacks. Does an electronic enrollment system mean your agent will take on more business and leave you with less and less personal interaction? Only time will tell.
So, if not based on carrier offerings, or technology, how do I find a quality agent in my area? An unpopular answer, the old-fashioned way. You NEED to speak with the agent in person. You NEED to speak with more than one. What kinds of other businesses do they currently have as clients? What lines of insurance do they offer? What do they specialize in? What products do they know, and what products do they NOT know? Do they have someone to bring in for the products they do not write? Do they ask questions to understand your business, or do they just want to talk to you about insurance? Can they grow with you?
All these questions are absolutely essential to answer when searching for an agent or agency to work with. The products they offer (or don’t offer), the technology they use to implement it, and the personal touch they provide directly to your employees will impact multiple areas of your business. Your employee morale, your ability to hire, and your ability to retain talented workers is directly related to the benefits you offer. Is that something you can really entrust to someone only interested in a commission?
Redline Health is an Independent Insurance Agency in Fayetteville, AR, licensed in Arkansas, Oklahoma, Missouri, and Texas. We have agents that specialize in Group Insurance, Individual Insurance, Medicare Plans, and Ancillary Benefits. Our promise to our clients is to find the right solution for you, even if that means referring you to a competitor.
EDUCATE | ADVOCATE