Updated as of June 2018.
Health insurance is bookended in volumes of mystery. You know you need it, you want to have it, but odds are, you don’t know enough about it to make the first two points happen.
If you’re an employer thinking about offering group health insurance to your employees for the first time, it can be unclear why you should provide something that’s saddled with so much confusion. 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.
What is group health insurance?
Put simply, health coverage 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).
Why would you want it? Well, outfitting your team with health benefits makes 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.
A health plan is the number one benefit most people seek when they’re applying for jobs. Picture it this way — if your benefits offering was an ice cream sundae, health insurance would be the actual ice cream in the dish. All the other stuff, like free food and unlimited vacation, are just the cherries on top. So, if you want to keep your team happy, it’s a good idea to scoop health coverage into your overall compensation package. Then, tell your employees to dig in.
How do I get group health insurance?
Group health coverage is basically like a cushion that you or your employees probably won’t use right away. However, you keep it in case something happens. Aside from the monthly premiums, you can simply forget about it when you’re not using it.
You can snag a plan through SHOP (Small Business Health Options Program), a benefits service like Gusto, or an insurance company. Here’s a bit more color on each of the options you have at your fingertips:
How group health insurance works (in a nutshell)
Step 1. You buy a health plan.
For group health insurance, this happens through a few different avenues.
- There’s 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.
- A service like Gusto, which can recommend health plans specifically for your company. We have experienced advisors that are available to guide you at each step.
- If you choose to purchase a health plan directly through an insurance company, you can simply call Anthem, Aetna, Blue Cross, Blue Shield, Cigna, or another insurer to get set up.
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 where you are. 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.
Step 2. If you’re an individual, you get put into a statewide risk pool.
Once you pin your plan down, you 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 your risk level — the likelihood you will need care — along with everyone else who purchased the same plan as you. It’s like the ultimate secret society.
Step 3. You give and take from that pool.
If someone needs care, the insurance carrier uses a sliver of the money in your group to foot the bill. The type of plan you have will influence whether or not you can take more or less money from the collective pot. For example, if you have a platinum plan, more money will be taken out than if you had a bronze plan, because you spent more dollars to nab that extra level of care.
It’s natural to feel unclear about spreading the health insurance love. Luckily, after you see how easy it is to buy coverage, it will make it a whole lot easier to get comfortable with.