Group health insurance is a health plan an employer buys for its employees, and often their families, under one policy. Because the risk is spread across the whole group, coverage is usually more affordable per person than individual health insurance, and the employer and employees share the cost.
What is group health insurance?
With a group health plan, the business chooses a carrier and one or more plan options (for example HMO, PPO or HSA-eligible plans). The employer pays part of the premium and employees pay the rest, usually through pre-tax payroll deductions. Employees can typically add their spouse and dependents.
Group plans can also include dental, vision, life and disability coverage. Businesses can buy a plan directly from a carrier, join a PEO (professional employer organization) to access large-group rates, or choose a self-funded or alternative funding arrangement.
Why group health insurance is important
- Hiring and keeping good people. Health coverage is one of the benefits employees value most when they compare job offers.
- Tax advantages. Employer contributions are generally tax-deductible as a business expense, and employees’ share can be paid with pre-tax dollars.
- Lower cost per person. Group pricing is usually better than what employees would pay for similar individual coverage.
- A healthier, more productive team. Employees with coverage are more likely to get preventive care and miss fewer days of work.
How many employees do you need to offer health insurance?
Businesses with 50 or more full-time employees. Under the Affordable Care Act, employers with 50 or more full-time employees, including full-time equivalents, are “applicable large employers.” They must offer affordable coverage that meets minimum value to their full-time employees (and their dependents), or they may owe a federal penalty.
Businesses with fewer than 50 employees. There is no federal requirement to offer health insurance, but you can. In most states, a small group plan needs at least one eligible employee who is not the owner or the owner’s spouse; some states and carriers require two. The small group market usually covers businesses with up to 50 employees (up to 100 in a few states).
Carriers also set participation and contribution rules, for example a minimum share of eligible employees who must enroll (employees with other coverage can usually waive) and a minimum share of the premium the employer must pay. Requirements vary by state and carrier, and some states have their own rules, such as Hawaii, which requires coverage for many employees who work 20 or more hours a week.
Small businesses with fewer than 25 full-time equivalent employees may also qualify for the Small Business Health Care Tax Credit when they buy coverage through the SHOP Marketplace and meet the wage and contribution requirements.
How Redvo helps
Our licensed brokers compare medical, dental, vision and PEO group plans from national carriers for teams of 2 to 500+ in all 50 states, and help with eligibility, enrollment and renewals. Tell us your headcount and state, and we will come back with the options side by side. Request a free group health quote or call us to review your current plan.
Frequently asked questions
When can my business start a group health plan?
Small businesses can generally start a plan in any month of the year. Coverage begins on the first of a month once the carrier approves the application. After that, employees enroll at each annual renewal, when they are newly hired or after a qualifying life event such as marriage or the birth of a child.
Do part-time employees have to be offered coverage?
Not always. The employer sets eligibility within the carrier’s rules, and many plans cover employees who work 30 or more hours a week, with some allowing 20 or more. Larger employers covered by the Affordable Care Act must offer coverage to full-time employees, meaning those working 30 or more hours a week on average.
Can employees turn down the coverage?
Yes. Employees can waive the plan. Those who waive because they already have other coverage, such as a spouse’s plan, usually do not count against the carrier’s participation requirement.
What is the difference between HMO, PPO and HSA plans?
An HMO uses a set network and usually needs a primary care referral to see a specialist, and it often has lower premiums. A PPO lets employees see in-network and out-of-network providers without referrals, for a higher premium. An HSA-eligible plan has a higher deductible and lets employees put pre-tax money into a health savings account.
How does a PEO help with group health?
A PEO (professional employer organization) combines the employees of many small businesses into one large group. That can give a small company access to large-group plans and rates, and the PEO also handles payroll and HR administration.
What happens when the plan renews?
Group plans renew every 12 months. The carrier sends new rates before the renewal date, and that is the best time to compare other carriers and plan designs. Our licensed brokers review your renewal for free.