Thinking about offering group health insurance to your employees for the first time? In this article, we’ll define what health insurance is, show you how it works, and explain how you can buy it for your team.
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What is group health insurance?
Put simply, health insurance helps pay for your medical treatment when you’re sick and covers doctor visits that help you stay healthy. Group health insurance is a plan that covers all the employees who work for a given company or organization (and potentially their dependents).
What are the advantages of offering group health insurance?
Outfitting your team with health benefits can make it a lot easier for your employees to cover their regular and urgent doctor visits, hospital stays, and medical treatments (like physical therapy). It also allows employees to buy additional insurance to cover their entire families in one fell swoop.
Plus, a health plan is the number one benefit most people seek when they’re applying for jobs. If you want to keep your team happy, it’s a good idea to offer health coverage as part of your overall compensation package.
How does group health insurance work?
What happens when you purchase a plan and begin offering it to your employees? Here’s how the process works:
Step 1. You buy a health plan.
There are a few different ways you can select a group plan for your company:
- Go through SHOP, the Small Business Health Options Program for companies with 50 employees or fewer. It’s a federal (and in some places, state) marketplace that sells health insurance plans for you and your team.
- Use a broker like Gusto, which can recommend health plans specifically for your company. Working with a broker is highly recommended if you’re a small business that is still getting used to the idea of health benefits. A broker will help you zero in on the carrier and plan that works best for you. Also, the price is exactly the same for small employers, whether you have a broker or not. Since it won’t cost you any more than doing it alone, you may want to seriously consider getting that extra dose of help.
- Purchase a health plan directly through an insurance company by calling Anthem, Aetna, Blue Cross, Blue Shield, Cigna, or another insurer to get set up.
Step 2. Individuals get put into a statewide risk pool.
Once you pin your plan down, your employees who enroll in the plan get placed into a particular group. Keep in mind that small businesses aren’t a part of this pool, but individuals are.
The group is based on each individual’s risk level—the likelihood they will need care— along with everyone else who purchased the same plan. It’s like the ultimate secret society.
Step 3. Each individual gives and takes from that pool.
If someone needs care, the insurance carrier uses a sliver of the money from the group to foot the bill.
The type of plan the individual enrolled in will influence whether they can take more or less money from their risk pool. For example, if they have a platinum plan, more money will be taken out than if they had a bronze plan because they spent more dollars to nab that extra level of care.
It’s natural to feel unclear about offering health insurance. Luckily, after you and your employees learn how easy it is to buy coverage, it will make it a whole lot easier to get comfortable.