4 Types Of Group Health Insurance Plans For Small Businesses
More often than not, any option for health coverage that an employer offers to his/her employees and their families falls under the definition of ‘group health plans’, and nowadays, most small business owners offer health coverage to their employees, to stay competitive. Back in the day, group health insurance for small businesses was more of a bonus than a basic benefit.
However, today’s market has significantly changed.
Although all the group health insurance options come with their fair share of pros and cons. It is you who has to decide which type of group health insurance plan is best suited for you. Let’s dig into those options as well as their benefits.
Types Of Group Health Insurance Plans
- Fully-Insured Plans
Out of all of the different types of group health insurance, the fully-insured plan is the one with the most traditional options. Fully-insured plans involve the insurance company in taking the risks associated with healthcare costs and charging your small business an annual premium for the advantages in the insurance policy that is paid for by the employees. There are various factors that an insurer uses in order to calculate group health insurance premiums such as:
- The claims history of the employer
- Health and size of the group
- Types of occupation
- The average age of the group
- Additional benefits and level of coverage
- Level-Funded Plans
Level-funded plans are unlike traditional plans with annual premiums. Instead, they are based on a monthly payment rate. The insurance carriers use census information to evaluate the amount your small business is required to pay. This rate depends on several factors including fees, claims allowances as well as stop-loss coverage premiums. By the end of the year, the carrier adjusts the monthly level based on the group performance.
- Self-Funded Plans
Although the insurance company covers the expense of employee health costs in a fully-insured plan, self-funded plans, on the other hand, put the burden on the employer. This generally results in more affordable rates and more control over a health insurance plan, with the arrangement of your small business consenting to the risk of having to pay for any fatal claim.
This plan is usually a good option for large businesses, however, small businesses can also benefit from self-funded plans. They can go for a partially self-funded plan with stop-loss insurance. This particular option of a group health insurance plan limits your risk so that you will still be able to gain some of the advantages of self-funding without having to take on the entire burden in case of any destructive claim.
- High-Deductible Health Plan With A Savings Option
A High-Deductible Health Plan is exclusively based on lower premiums and higher deductibles for group members. This implies that members of the group with this type of group health insurance plan will have to pay more from their pockets before the plan pays for its share.
However, the arrangement is that this particular plan keeps the monthly premiums lower, thereby making it an excellent option for employees who do not use medical services too much. Furthermore, High-Deductible Health Plans can also be coupled with savings options like a health savings account. This account allows members to make contributions to an account that they can use to pay for healthcare costs. Since the funds in this account roll over each year, it can also become a perfect retirement savings option.
At IMC Financial, we can talk about and offer all of the aforementioned types of group health insurance options for small businesses that are beneficial for both the employer as well as the employees. Our team of experienced and skilled professionals is here to help you determine which option would be best suited for your business, depending on your situation.
So, if you are looking for small business life insurance for your employees, get in touch with our team and figure out which option will be perfect for you today.
- How much life insurance do you need as a small business owner?
- Smart Life Insurance Strategies for Business Owners.
For more information, please do not hesitate to contact me.