Group health insurance helps employees pay for health care expenses. It is also commonly referred to as employer-sponsored group health insurance, as the employer shoulders some of the expense of the premiums with its employees.
Group health insurance can only be purchased by groups, not individuals. Businesses and organizations may enroll in group health insurance at any time of the year and then offer those benefits to eligible employees or members. Participants can either accept or decline what’s offered and then choose from among various types of additional insurance products offered, such as vision, dental and others. Group plans typically reduce the cost of health insurance—as the risk to the insurer is spread across multiple eligible members of the organization.
While each group health insurance plan’s coverage, premiums and other components vary, most share some basic defining characteristics.
- Require a 70% participation rate to be valid
- Eligible members have the choice of enrolling in or declining coverage
- The company and its employees share the premiums
- Employees or members of the organization may add family members and dependents to their plan for an additional cost
A business must have at least one full-time, or full-time-equivalent, employee to enroll in a group health insurance plan. Small businesses with less than 50 employees are not required to offer health insurance. However, larger employers, those with more than 50 full-time employees, must offer group health insurance.
Both businesses and individuals receive unique advantages from offering and participating in group health insurance plans.
Advantages for Businesses
- Money paid toward employees’ monthly premiums may be tax deductible
- Eligible small businesses may qualify for valuable tax credits
- Available group health insurance benefits can help with recruitment efforts
Advantages for Individuals
- Typically less expensive than individual health plans
- Premiums are typically paid pre-tax, meaning taxable income may be reduced
- Group health insurance typically provides better access to care than individual health plans at the same cost
To qualify for small business health insurance, a business needs between one and 50 full-time, or full-time-equivalent, employees (those who work at least 30 hours per week). It’s important to note that owners are not considered employees. Therefore, sole proprietors will not qualify, unless they have at least one employee. Additionally, in order to qualify for small business health insurance, the other employee may not be:
- The spouse of the owner
- Family member of the owner
- A partner of the owner
- A contractor of the owner
- A seasonal worker hired on a temporary basis, even if they work full-time during that period
Those businesses that have more than 50 full-time, or full-time-equivalent, employees will need to apply for large group coverage.
Deciding from among the various insurance products and options can be overwhelming and confusing. That’s why it’s important to work with a qualified and experienced employee benefits consultant that can help to navigate the myriad choices. Fringe Benefits Analysts can help business owners choose a plan that will achieve both fiscal and recruitment objectives.
We’ll help you assess your current group health insurance plan, then design and manage an insurance package that meets your company’s specific needs and budget. You’ll find that our review process maintains the most thorough examination of benefits. We’ll also educate your employees, so they understand and appreciate the healthcare benefits/products available to them. Contact one of our dedicated professionals in any of our six Utah locations for help.