For small businesses, group health insurance is a big step. It is a large financial commitment, but opens the employee field and makes employment more appealing for workers. While group health insurance does provide a guarantee of coverage for all of the full-time employees, it often comes with a price-tag that is difficult for many small businesses to justify. Group health plans remain one of the most important factors of employment across the country and if you can find a plan that works for your business it can give you a huge advantage when hiring new employees.
Small Business Eligibility
Group health insurance is available to any business operating in the United States. In order for employees to be eligible, they must be employed as full time, working 30 or more hours per week. However, husband and wife businesses are exempt to this rule and both partners can be insured regardless of hours worked.
Costs of Coverage
Because group health insurance plans are controlled by state law, the requirements and cost to small businesses vary from state to state. Regardless of where your state resides, the cost of health insurance is a big commitment for small businesses. One of the reasons for this is the amount of required coverage by federal and state government. Over the past several years, lawmakers have increased required coverage which has significantly raised the price of the insurance. For example, maternity care is one of the newly required aspects of small business insurance, even for businesses composed entirely of single males. This type of requirement is responsible for a significant portion of the cost of group coverage. Because of these requirements, it is more difficult to custom-fit insurance coverage to the business needs.
Alternatives to Group Coverage
In response to the growing cost of health insurance, many small businesses are choosing to provide a Health Reimbursement Arrangement (HRA) rather than traditional group health insurance. This method is becoming more popular because it is more cost effective for employers, and customizable for employees. An HRA allows employees to purchase lower cost individual health insurance plans with tax-free funds provided by the employer. The advantage to this system is that many employees can to find better values when shopping for their own insurance. Recognizing this trend, federal and state laws are starting to become more accommodating to these consumer-driven health plans as a viable alternative to group health insurance.
Group health insurance can often seem like an area of complex costs and confusing forms, but it doesn’t have to be. Your local insurance agent can help you navigate the process and find a plan that best fits your business.