What to Ask When Buying Group Health Insurance for Your Small Business

Health insurance 101

Your small business is your livelihood, and investing in your company by taking care of your employees is super important to your company’s well-being and growth. An excellent way to invest in your people—and, thus, your company—is by providing a group health insurance plan.

There is no federal standard that legally requires small businesses with under 50 employees to offer health insurance, however, if you decide to do so, you must offer it to all employees working at least 30 hours per week (considered full-time equivalent employees) and their family members. While this might seem like a big investment, there are several benefits to offering employee health coverage:

  • A recent study showed that employer-sponsored health insurance provides a huge ROI to larger companies, and we believe that to be true for smaller businesses, as well.
  • Your contributions to your employees’ health insurance premiums are usually deductible from your business taxes. (Check out the affordable care act tax credit provisions here.)
  • Employees who feel valued are more productive and happier with their jobs, which can translate into better recruiting and employee retention for your business.
  • Employees with better healthcare plans can better manage their own health.

Getting started with a healthcare plan can be challenging — the sheer number of insurance companies and plan choices can be mind-boggling. Not to mention the lingo: HMO, PPO, co-Insurance, deductible, oh my.

So, what do you need to ask before signing up for a group health insurance plan? We’re here to help!  

5 Questions to Ask When Shopping for Health Benefits for your Small Business

1. Do I need to cover all my employees and their dependents by my group health insurance plan?

Consider which team members will be eligible to sign up for your group health insurance plan. Will you offer it to full-time employees, part-time employees, or both? What about their dependents? The affordable care act defines small businesses as fewer than 50 full-time and full-time equivalent employees and so under this classification, you have the option to offer group health insurance or not. However, in such a competitive job market, more small companies are choosing to offer health benefits to attract top talent.

Texas and federal laws require small business owners who offer health benefits to make their insurance plans broadly available. According to the Texas Department of Insurance, “If you provide health insurance, you must offer it to all your employees who work 30 hours or more each week. You must also offer coverage for their dependents.”

It’s not unusual for a company to offer health insurance benefits only after a probation period, often 60 or 90 days. The maximum time a company can wait to offer insurance to eligible employees is 90 days, though. Small employers can opt to waive this waiting period entirely. This is up to each employer.

2. How much will health insurance cost ?

This depends on the insurance company and the specific plans and monthly premiums you offer, as well as which health plans your employees choose. According to the Kaiser Family Foundation (KFF), the average annual health insurance premiums in 2021 were $7,739 for single coverage and $22,221 for family coverage. Employers contributed an average of $6,440 and $16,253 for single and family coverage respectively.

Of course, this is just an average. The size of the group, type of industry, and average age are other factors that will change the health coverage costs and therefore the contributions of the employers and employees. The percentage an employer contributes to its employees’ health insurance premiums is optional and varies. The U.S. Bureau of Labor Statistics reported in 2021, “Employers paid 78% of medical care premiums for single coverage plans and 66% for family coverage plans.” It’s useful to look into what your peers are contributing so that you remain an attractive employer in your market and industry.

Cost also depends on the insurance plan you choose for your company. At Decent, because we built our plans from the ground up with affordability in mind, our small group health insurance plans often cost up to 35% less than traditional small group plans. That means lower healthcare  costs for the employer and the employee. When the insurance policy is more affordable for both the employer and the employee, more workers tend to opt in.

3. What does my small business health insurance plan need to offer?

While medical insurance is the primary focus of small group health insurance plans, it’s a good idea to add options for dental and vision coverage as well. This is optional for employers, yet is something employees say adds to the attractiveness of a job. As such, offering these plans is becoming the rule rather than the exception. Be sure to ask during your health insurance plan shopping period if these can be added on. At Decent, all of our plans include optional group dental and vision coverage.

4. What does the network of doctors look like?

You wouldn’t buy a car without understanding how it works. Neither should you buy an employee benefits plan without knowing what you will get. Make sure you have a clear idea of the geographic in-network coverage for your health plan and that it matches up with your employees’ needs. Will they need a referral to see a specialist? What hospitals are in-network? Is there a co-pay to see a primary care physician? How about a specialist? What are the plan details for prescription drugs? This information helps employees understand their total out-of-pocket costs, which is best to know before signing on.

5. How many employees are likely to enroll?

Nearly all small group plans have a participation requirement, meaning that a certain number of employees must enroll in the health plan, otherwise the insurance company is unable to offer the plan. While these numbers can vary, most health insurance companies require a minimum of 50% of a business’s total eligible employees (full-time equivalents) to enroll.

This participation rate is a hurdle for many small businesses, especially those in certain industries that may have lower-salary workers and the cost of health insurance coverage is an extra burden. Decent requires only 40% of eligible employees to enroll in their plan, thus making it possible for more small businesses to offer employee health benefits.

As you can see, offering a small group health insurance plan is an investment in your people that can pay off for your business. An affordable, quality health plan makes for a more attractive workplace, thereby helping you recruit better candidates and showing your employees you are invested in their well-being. That, in turn, can help you motivate and retain your employees. It’s the classic win-win-win scenario!

Our health insurance plans generally cost you and your employees up to 35% less than other plans. Want to see how much you can save? Try our rapid quote tool or contact Decent at support@decent.com.

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