Addressing 9 Common Concerns About Group Health Insurance for Small Business Owners
Group health insurance can be confusing, especially if you are not familiar with the healthcare industry. Employees, business owners, and individuals alike often find that they need extensive research just to understand a basic health insurance policy.
It can be difficult for small business owners to filter through the many available options for group health insurance. This is especially true for newer business owners. Since all California business owners with two or more employees are required by law to offer a group health plan, it is essential to understand how group coverage works and what must be done to get a policy started.
To help you sort through the jungle of health insurance facts, we have collected some of the most commonly asked questions about group health insurance for small business owners.
1. What kinds of policies are available under a group health insurance plan?
There are three main types of policies available under a group health insurance plan. They are the HMO or Managed Care policy, PPO or preferred provider organization, and a POS, or point of service plan. Each has attractive benefits and drawbacks unique to each type of policy. It is important to understand the type of plan your employees are looking for before deciding on a type of group health insurance plan.
HMOs are the most popular, and frequently offer lower deductibles and co-payments, but are usually not eligible for health savings accounts. As these accounts become more popular, this has been a concern for many group insurance policyholders.
2. What is a health savings account?
A health savings account, or HAS, is a new plan introduced by the United States Congress in 2004. It allows employees to make contributions to an bank account, earn interest, and make payments for qualified medical expenses, including health care premiums - all tax-free. The payments to the account are submitted pre-taxation, making health savings plans ideal for employees on tight budgets.
3. What types of group health insurance plans are HSA eligible?
In order for a plan to be HSA eligible, it cannot offer a co-pay and the yearly deductible must be greater than $1000.
4. Am I required to offer group health insurance for all my employees?
Yes, you are required to offer identical options to all employees, regardless of when they joined your organization. Doing so is not only the law, it also helps you avoid discrimination claims, which are far more costly than added premiums.
5. What are benefit riders?
A benefit rider is an add-on to an already existing health insurance policy. The rider allows further customization of a health plan to suit individual needs, while affording a greater level of coverage for the policyholder. For example, a dental benefit rider would add on dental care coverage to a pre-existing health insurance policy. This increased coverage increases the monthly premium, but often, the benefits outweigh the added cost for most employees.
6. Does the zip code of my business’ physical address affect my group health rates?
Yes, the location of your company may affect the cost of your group health insurance premiums. This is due to many factors, location of provider networks and risk management being two of the major factors. If your organization operates in several locations, you might find each location carries a different premium rate.
7. How do I find the best deal on a group health insurance plan?
The most important step you will take in obtaining a group health policy is comparison shopping. Don’t settle for the first plan you find! Take time to view all your available options and check with several insurance companies before making your final decision. Consulting a skilled health insurance agent is often very helpful in sorting through multiple health insurance plans.
8. Should I consult my employees before switching or adding a group health plan?
This is up to you, but it is of course considerate to consult your employees before suddenly switching to a group health insurance plan. You will need to consider lag-times before benefits become active, and how different rates will affect the range of your employees. Not all insurance policies are one size fits all and your employees may not be able to afford the new coverage. Try to find a plan that will appeal to the majority of your employees so everyone can enjoy the group health plan coverage. It’s important to note that federal law requires that health insurance companies offer all available group health insurance plans to interested companies, regardless of size.
9. What is HIPPA?
HIPPA stands for the Health Insurance Portability and Accountability Act. This act is set in place to guard the privacy of employee health records and provide increased accessibility to health insurance. There are new standards, and it is important to make sure your company is in compliance. If you are unsure of what this means for your company, you must check with your insurance representative for further details.
Understanding the basics of health insurance is essential for all small business owners. These 9 commons questions and their answers are just the beginning to understanding group health insurance. To learn more, please browse our other health insurance information pages.