Small Group Insurance - Explained

What is Small Group Insurance?

In most states, the term “small group” applies to groups of 2 to 50 employees. And in California, Colorado, New York, and Vermont, it includes groups with up to 100 employees. Businesses that fall into the small group category all have the same coverage options available in the small group market, and the rules in terms of pricing and coverage availability are the same regardless of whether you have two employees or 42.

Often, small group insurance is far more affordable than the equivalent individual policy. This is because the insurance company can negotiate better rates with hospitals, clinicians and other services. There are also legal limits set for premiums – for example premiums for older employees cannot be more than three times those for younger employees.

A question we get a lot from people searching for affordable group health plans is how the Affordable Care Act (Obamacare) has changed group health insurance in California. They want to know:

  • Who classifies as a “small business employer.”
  • What determines the “premium?”
  • How can I compare plans? (cost of doctor visits, in-hospital services, prescriptions).
  • What sort of tax benefits does group medical insurance offer employers and employees?

To answer common questions about the ACA and help demystify group health insurance in general, we’ve created a few easy-to-digest graphics to break things down. You’ll also find a list of resources covering California group medical insurance and tips for selecting the right plan for your employee health benefits.

Running a business is hard enough without navigating the ins and outs of group health insurance. We’re expert benefit advisors with decades of experience and we’re ready to help at no additional charge or fees.

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1. How Insurance Companies Calculate Rates

With the introduction of the ACA in 2014, the rate for small group health insurance is based on the exact age of an employee, as well as the age of each dependent spouse and child.

2. Health Plans Are Rated using "Metallic Levels"

Health insurance is as complicated as it is expensive. To help people understand benefits and compare plans, the federal government uses a process to separate plans into four groups – platinum, gold, silver, and bronze.

Gold pays for services better than silver which is better than bronze. A platinum plan is the best, meaning the insurance company pays the most and the patient pays the least for services. Under the ACA, all plans must cover at least 60 percent of medical expenses. The premium cost is relative to the benefits so Platinum policies will be the most expensive, Bronze plans being the most cost effective.

3. Savings Available by Utilizing Plans that Exclude Pricey Providers & Doctors

Good things to know

The price of medical care varies dramatically between doctors and hospitals. By enrolling in a plan that excludes expensive doctors and medical facilities, employees can obtain comprehensive benefits (e.g., platinum level) at a low cost.

So, when you evaluate a medical insurance plan for your employees, keep in mind that you can offer a “narrow” or “medium” provider network and spend less than if you offer a “full” network.

4. Small Companies Can Share the Cost of Employee Benefits

Group medical insurance is extremely tax favored<>, which is one of the reasons companies offer employee benefits. Unlike wages, employer-sponsored health coverage is not subject to state and federal income taxation – for the employer or the employee.

All California health insurance companies require employers to contribute a minimum of 50 percent of the monthly cost of an employee-only plan. Most insurance companies also allow an employer to contribute as little as $100 per employee per month. The catch is that if an employer pushes too much cost on to the employee, employees won’t sign up and a group plan needs a minimum percent of the employees to be viable.

Mid-Size & Group Insurance

These policies are normally through an employer or association and offer coverage to all eligible persons within the group. After the Affordable Care Act came into being, important reforms targeting plan quality and employee costs were introduced.

Enrolment in group plans was made easier, and because of the pre-tax funding of premiums such plans are cheaper than taking out individual health insurance. There can be multiple plan choices offered, and groups can use their size to negotiate better benefits for life insurance, vision and dental care, as well as long-term and short-term disability insurance.

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Insurance Forms and Applications

As with all things medical involving insurance, the forms and applications are necessarily complicated and involved. It is important to get expert advice when filling these in as an error could result in you not being able to claim the benefit to which you’re entitled. Make sure that the insurance company that you deal with has a good support system which allows you to ask questions and query problems you may encounter with the administration.
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Medicare Supplements

Medicare is limited in its scope. With an ageing population and massive funding issues Medicare tries to cover hospital insurance, outpatient coverage, and prescription coverage. There are huge gaps in the coverage – copayments, coinsurance, deductibles, medical expenses incurred travelling outside of the United States – are amongst the things which are not covered. “Medigap,” as it is known, is designed to fill these deficiencies in your cover.
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Dental insurance is often covered together with vision insurance in a single plan. Both of these are separate from normal medical insurance. These plans cover emergency care and maintenance – most do not cover cosmetic surgery.

The deductibles on dental insurance can be expensive. It is entirely dependent on the premiums that are paid and there are benefit caps and no limits to your out-of-pocket costs for adult dental care.Paediatric dental care is treated far more sympathetically with limited out-of-pocket costs and unlimited insurance benefits.

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Short-Term insurance

Short-term insurance is used for the millions of people caught in the coverage gap, who have incomes that are too high for subsidies or who missed open enrolment. Do be aware that there are 10 states which do not allow short-term plans.

This insurance can be used in the 14 states who have not accepted federal funding to expand Medicaid, and by people whose household incomes fall under the federal poverty level. If you’re premium is unaffordable and you don’t get premium subsidies you should consider a short-term health insurance plan.

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Life Insurance

Life insurance is one of the most important policies for families and businesses alike. Having your main breadwinner taken from you leaves an immense financial burden which life insurance addresses.

There are many forms of life insurance from fixed term policies, through to whole of life insurance and many variations in between. There are also critical illness policies which pay out the life insurance before death in the event of a fatal illness being diagnosed.

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Small Group Insurance

As the name suggests, these are insurance policies taken out by small groups of individuals to take advantage of the reduction in overall risks, benefits and deductibles. these policies are usually geared towards businesses with 100 or fewer full-time employees.

Often, small group insurance is far more affordable than the equivalent individual policy. This is because the insurance company can negotiate better rates with hospitals, clinicians and other services. There are also legal limits set for premiums – for example premiums for older employees cannot be more than three times those for younger employees.

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Individual health insurance

Not everybody has health coverage through their job. This is where buying individual health insurance comes in. Individual health insurance is coverage that you purchase on your own, on an individual or family basis, as opposed to obtaining through an employer. Individual health insurance can be purchased through the exchange, or off-exchange (directly from the health insurance carrier). If you’re a young adult of 26 years of age or older, unemployed, a part-time employee, or self-employed – even retired – individual health insurance is essential. Even a broken bone can have serious consequences on your finances. You need to have at least the bare minimum cover for accidents, or long-term illness If you are ready to start reviewing options please click the link below if you would like to know more we have provided additional information below:
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