There are often many questions regarding the qualifications and specifics of small business health insurance (or group) policies. We want to provide some insight so you have the information pertinent to cover your employee’s health care needs.
How many employees do you need for a group policy?
Surprisingly you only need two employees including yourself to qualify for a group policy. This often means the owner and one full time equivalent employee, or common law employee, basically someone who works at least 30 hours weekly, and is not your spouse. If you have a small business with three employees and one isn’t your spouse, then you still may qualify for group coverage. In certain states, you may even qualify for a group policy with only 1 person. According to the Affordable Care Act (ACA) the maximum amount for small group coverage is 50 employees.
How do group insurance policies work?
These plans are purchased by organizations and companies, then offered to their members or employees. Plans can only be purchased by groups, meaning individuals cannot purchase this coverage. 70% participation is required for these plans to be valid. No two plans are ever the same due to many differences in insurers, types, costs, and terms and conditions. When a group or organization chooses a plan, the members or individuals are given the option to accept or decline the coverage.
What are the benefits of a group insurance plan?
The main advantage of a group plan is that it divides risk across a pool of individuals. This is beneficial due to the fact that it keeps the group member’s premiums low, and insurance companies can manage risk because they have a better idea of who they are covering. Insurers can gain even greater control over the costs through Health Maintenance Organizations (HMO’s), where providers contract with insurers to administer care to members.
HMO’s tend to keep costs low, with a pre-selected network of providers for your care. Preferred provider organizations (PPO’s) give the patient a wider choice of doctors and more access to specialists but tend to have higher premiums than an HMO.
49.6% of the U.S. population is covered by group health insurance. [1]
How Much Does Group Health Insurance Cost?
$7,400 is the average group health insurance policy cost for an individual annually. Employers pay approximately 80% and employees the other portion. Family policies averaged slightly more than $21,000. [2]
Is Group Health Insurance Required?
There is no law requiring small business owners to provide health insurance. However, the ACA made significant changes that small business owners should be aware of when deciding whether to provide insurance for their employees.
Large companies may face penalties if they do not provide coverage under the Affordable Care Act. A small business will not be penalized if they have less than 50 full-time-equivalent employees. If you have at least 50 full-time-equivalent employees but none receive an individual premium tax credit or cost-sharing reductions (both based on income), there’s no penalty—whether or not you offer health insurance.
For more information, quotes, and enrolling your business in some of the nation’s best small business health benefits click here!
Works Cited:
- “Group Health insurance” www.Investopedia.com
- “2020 Employer Health Benefits Survey” KFF.org
