Connect with us

Columns

Group Health Insurance May Be Best for Your Business … Even If You’re an Individual

Even if you’re an individual, group health insurance may be best for your business.

mm

Published

on

RECENTLY, I HEARD A business owner tell a frustrating story about how she was forced to spend a surprisingly large sum for the treatment of a health condition. She was angry because her individual health insurance plan, bought through the Marketplace in 2014, had just increased in premium for the fourth time. She expected more from her insurance!

Eyecare Shenanigans: 2023’s Top Optometry Articles in Invision Magazine
Eyecare Shenanigans

Eyecare Shenanigans: 2023’s Top Optometry Articles in Invision Magazine

Bringing Independent ECPs Into the 21st Century With the Technology Solutions a Modern Eyecare Business Needs
INVISION Podcast

Bringing Independent ECPs Into the 21st Century With the Technology Solutions a Modern Eyecare Business Needs

The Making of Bespoke Eyewear, An Acetate Kitchen and Collecting Famous People’s Heads
INVISION Podcast

The Making of Bespoke Eyewear, An Acetate Kitchen and Collecting Famous People’s Heads

There has been a growing rift between group and individual insurance since 2015 — most owners have not been able to keep up with all of the details. I have heard, erroneously, from many business owners that they believe:

  • They couldn’t do group insurance.
  • They would have to pay for all of their employees.
  • Individual insurance would be cheaper.

Not true.

Individual insurance contracts (aka Obamacare plans) are no longer the same as group plans. Differences include deductibles, max out-of-pocket financial exposures, and pricing. In most cases, individual insurance is less advantageous for the consumer.

Many small business owners are not aware of the increased availability of group insurance.

In 2014, the Affordable Care Act changed many of the regulations affecting small businesses and insurance. States have also been tweaking rules applicable to groups employing between two and 50 people (small groups). It is very possible that a small business would be better off with group insurance — and the employees as well.

Advertisement

Here is the basic situation: In most states businesses with two or more people are eligible to purchase group insurance. Why is this important?

Because, in many states, group insurance may be less expensive per person, have lower financial exposures and have access to larger PPO networks.

How does it work? There is a little-known aspect of the Affordable Care Act that makes group insurance very accessible for small businesses. If you have an inception/renewal date of Jan. 1, then the business is not required to contribute to the employees’ premiums. Further, there are no participation requirements (i.e. how many people must participate of the employed population), so the business owner could be the only one participating — a “group” of one. Some states do not allow groups of one. In these states, you must have two participants. And note that husband-wife groups are treated differently and may not be eligible.

If the group insurance plan renews on any other date of the year, then the group is subject to contribution and participation requirements. These requirements are set by the insurance companies and are typically less stringent than most business owners believe.

Typical participation requirement: 70 percent of eligible full-time staff after qualified waivers. A qualified waiver is someone who has an insurance plan from a spouse, the government or an individual plan. Let’s say we have a group of 10 full time employees, four of whom have coverage through their spouse and one who is on Medicare. Here is how we determine the participation requirement: 10 eligible – 5 qualified waivers = 5 employees. In this case, to attain 70 percent participation, only four people must participate!

In regard to employer cost for groups that do not start/renew on Jan. 1, requirements may not be as high you think. In most cases, the employer is asked to contribute 25 percent of the cost of individual coverage on the lowest cost plan.

Advertisement

Here’s how this plays out in the real world: Most small businesses offer two or three plans for the employees to choose from, one of which will be the “lowest cost.” The employer then calculates 25 percent of what it costs for that single person and the employee is responsible for the remaining premium. How much money are we talking about? Typically an employer is asked to contribute $75 to $225 per month per person depending on the age of the employee — only for those who choose to contribute.

SPONSORED VIDEO

SPONSORED BY VARILUX

The Best Overall Progressive Lens, Now Powered by AI

Engineered with Behavioral Artificial Intelligence and utilizing new XR-motion™ technology, Varilux XR series goes beyond prescription and eye physiology to consider the patient’s visual behavior and design a progressive lens that respects how
their eyes naturally move.

Varilux XR series comes in two versions, Varilux® XR design and Varilux® XR track. The Varilux XR track lens provides an additional level of personalization by incorporating the exclusive Near Vision Behavior Measurement, providing up to 25% more near vision width3 according to the patient’s need, so patients get the highest level of customization.

Discover Varilux XR series and enjoy instantly sharp vision in motion4 and seamless transitions from near to far.

For more information, visit here.

Promoted Headlines

Most Popular