Group Coverage Basics (Page 2 of 7)
Buying small business health insurance (group
coverage) has different rules than buying self employed, individual or
family medical insurance. The good news is that coverage for small
businesses provides advantages not offered to individuals. Below, we outline
the basics behind small business health insurance coverage.
-
What Is Group Coverage?
-
Is Insurance Required?
-
Is Your Business
Eligible for Group Coverage?
-
Who Is Eligible for Coverage?
-
What Do Employers Have to Pay?
Group medical
coverage refers to a policy issued to a group (typically, a business with
2-50 employees) that covers all eligible employees and, sometimes, their
dependents. Self Employed, individual. family medical coverage, on the other
hand, is a single policy issued to a single person or family.
The rules are quite different for group coverage
versus individual coverage. With individual coverage, the insurer will base
its premium rates (or deny coverage) based on the detailed medical history
of the person or family.
With small businesses, on the other hand, the insurer
determines a premium price based on risk factors balanced over the entire
group, using general information on members of the group, such as age or
gender or medical history. Perhaps most importantly, insurers are required
by law to offer coverage to small groups. In contrast, there is no such
guarantee of coverage for individuals.
top
Is Insurance Required?
There is no law requiring employers to offer employees or their dependents
medical insurance. If you do offer coverage, however, you will be subject to
many rules and regulations—the most important of which we explain at this
site.
top
Is Your Business
Eligible for Group Coverage?
In order to qualify for group coverage, a business generally has to meet
certain requirements. Submitting your request to speak with a broker may better be able to answer these questions
specific to your situation. A "small employer" is defined as a business with
2 to 50 full-time employees. Owners are generally counted as employees, so
sole proprietorships with one employee fall into this category, as do
partnerships without any employees (by definition partnerships have two or
more partners).
top
Who Is Eligible for Coverage?
The general rule is that if an employer offers group health coverage to any
full-time employees, the employer must offer coverage to all full-time
employees, however you may be able to designate employees by class (i.e.
management) Your broker may be better able to assist you with these
specifics
As for part-time employees (defined as those working
20 to 29 hours per week), the employer has the option of whether to offer
coverage to them. If the employer offers coverage to any part-time
employees, all of them must be offered the coverage.
These rules apply regardless of the medical condition
of the employees. In other words, any eligible employee can't be denied
coverage based on previous medical problems, otherwise known as pre-existing
conditions.
In addition, any dependents of eligible employees are
also generally eligible for coverage under a group plan. Dependents include
spouses, children, and in some cases, unmarried domestic partners.
Dependents cannot enroll for coverage unless the employee has enrolled.
top
What Do Employers Have to Pay?
Most insurers and health plans require employers to cover at least half of
the premium cost for covered employees. This requirement is meant to
encourage more employees to join the plan, and prevent what's known as
"adverse selection" where only those prone to sickness are motivated to sign
up, creating a much higher-risk group for the insurer. Some employers choose
to pay all of the premium; others require employees to pay a portion (up to
50 percent).
On the other hand, employers have no obligation to pay
for premiums for dependents. In other words, employers may contribute
towards premiums for dependents, but are free to require employees to pay
for the full premium cost for covered dependents.
top
Next Page
Request
free small business health insurance information
and quotes
