Looking to Buy Group Health Insurance?
Health insurance is often regarded as the most desirable workplace benefit for employees, meaning health insurance is essentially a nonnegotiable perk for employers to offer. However, employers should not purchase a group health insurance plan prior to shopping around and finding the best value.
Below are four questions employers may want to pose to insurers, agents or brokers prior to selecting a group health insurance plan.
1. What are the different types of group health insurance plans?
Here are the two most common types of group health insurance plans:
- Health maintenance organization (HMO) — Employees are given the opportunity to select an option from a list of providers that are within the network.
- Preferred provider organization (PPO) — Employees can seek care from providers outside of the network, but it is important that they are aware of the fact that doing so will likely cost them far more in fees than if they chose associated in-network providers.
Here are four other types of group health insurance plans:
- Exclusive provider organization (EPO).
- Fee for service (FFS).
- High deductible health plan (HDHP).
- Point of service (POS).
2. How much does group health insurance cost?
A 2021 survey by the Kaiser Family Foundation found that “the average annual premiums in 2021 are $7,739 for single coverage and $22,221 for family coverage.” On average, employees were responsible for contributing approximately 17% of the total premium for single coverage and 28% of the total premium in instances of family coverage.
In most cases, employers are required to cover at least 50% of their employees’ monthly premiums. The remainder of the premium is paid for by the individual employees.
The exact costs of the premiums as well as the percentage of the premium that each employee is liable for will depend on a number of variables, including the following:
- The type of insurance plan.
- Any applicable Affordable Care Act (ACA) requirements.
- The ages of the individuals seeking enrollment.
- The presence of tobacco use.
- The size of the employee’s family.
- The location of the business.
- The level of coverage.
The department of insurance within each state will regulate and dictate the premium rates for group health insurance. Therefore, insurers are required to uphold and enforce rules that are set forth by the department of insurance.
3. Can employers be denied coverage because of the group’s health status?
Under both federal and state laws, employers with anywhere from two to 50 employees cannot be refused coverage by providers based on the health status of the group that would be covered by the insurance plan. This is known as a guaranteed issue. Certain states will often extend such a guaranteed issue to employers that employ one or more employees.
Additionally, the ACA makes it so that insurers are not allowed to base premium rates for small groups on the health or claims histories of the group. Although larger employers that employ at least 50 employees are required to receive coverage on a guaranteed-issue basis, insurers are permitted to take the group’s claims history into account when setting premium costs.
4. What are the options for dental and vision insurance?
Employers that offer group health insurance to employees typically provide both dental and vision insurance to their employees as well, which strengthens the value of the benefits package. Though dental and vision insurance are separate products, you may be able to buy them as add-ons to your group health insurance plan.
For employers, there are many other questions worth asking when seeking group health insurance, but the four questions discussed above are a great place to start. There are additional factors that also need to be considered, such as the needs of your workforce and the number of employees who can afford to pay for health insurance.