How to Provide Group Health Insurance
According to the Kaiser Family Foundation's 2010 Annual Employer Health Benefits Survey, 59 percent of all firms with between three and nine employees offered some form of group health coverage, and 68 percent of all firms with less than 200 employees offered such coverage. Nationwide, employer contributions ranged from an average of $4,102 per individual worker per year for an HMO up to an average of $10,210 per worker to cover a preferred provider organization plan for a family.
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Instructions
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Determine eligibility criteria. If you offer group health coverage, you will have a higher fixed cost per employee. It may not be cost effective to insure part-time employees. You can create employment criteria to qualify for group health coverage, such as requiring a minimum of 20 hours per week. State laws may apply.
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Take an employee census. Before you can get a quote from any group provider, you must know which employees are interested. Make a list of each employee you intend to cover, along with their sex, age, smoking status, spouse's age, and number and ages of children. Note whether they intend to purchase family coverage or individual coverage if offered by the company.
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Determine your COBRA status. If your business generally employs more than 20 full-time equivalents on the majority of its business days during the year, you will be required to follow certain federal regulations under COBRA, or the Consolidated Omnibus Budget Reconciliation Act of 1986. For example, you must provide continuation coverage for employees people who leave the company and their dependents, and you must inform them of their rights when you hire them.
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Consult an agent or health insurance broker. Provide that person with your employee census, and discuss your overall budget for health insurance for your employees. Generally, you must subsidize your employee group coverage premiums. You must also get a minimum percentage of employees to enroll, though specifics vary by state and by company. This is to control adverse selection -- the tendency of the healthy to forego health insurance while the very sick tend to enroll, driving premiums up.
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Decide whether to offer visual and dental insurance. Premiums on these plans generally only cost a few more dollars per month on top of the regular major medical plans.
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Compare different kinds of plans. HMOs, or health maintenance organizations, that restrict enrollees to receiving care from a limited number of providers within a network are frequently less expensive than traditional plans, though not always. Consider a high-deductible health plan, which workers can combine with a health savings account for a lower premium than many other kinds of plans.
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Conduct an enrollment. Your agent should be willing to help you with the paperwork, and in some cases, meet with workers individually for a brief consultation at your workplace. Generally, you want your employees to enroll as soon as they are eligible, or only during a limited open enrollment period. Otherwise, you may get adverse selection as employees join the plan only when they or a family member gets sick.
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Start deductions. Deduct the employee's share of health insurance premiums from his or her paycheck each month and forward the proceeds, together with your contribution, to the health insurance company you select.
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Tips & Warnings
Insurance is primarily regulated at the state level, not the federal level. Many state laws unique to your own situation will apply.
Depending on the size of your company, HIPAA rules may apply. See the Employer's Guide to HIPAA located in the Resources section for more information.
