5 Things to Consider When Offering a Group Medical Plan for the First Time

5 Things to Consider When Offering a Group Medical Plan for the First Time
January 9, 2019 John Dudek

If you are a newer company or one that is experiencing growth, attracting and retaining talented employees is incredibly important to your future success.  One great way to bring in talented employees, and keep them happy, is to offer an employee benefit package.  In fact, recent studies show that between 86% – 90% of job applicants consider health insurance/benefits as one of their top 2 factors in choosing an employer.

Most employers want to offer health benefits to their employees, but many don’t know where to start.  Others don’t know how to fit it into their budget.  Below are a few key items to consider when looking at your first group health insurance plan:

Contribution – As the employer, you will be responsible for paying a certain amount for your employees’ health insurance.  Typically, carriers will require you to pay at least 50% of the employee cost.  Some carriers will allow a flat amount per employee per month, which makes budgeting for future employees more predictable.  Employers are not required to pay anything for dependents (spouses, children), but they can if they want to.

Participation – Carriers will require a certain number of employees to be enrolled on the group health plan.  The percentage will vary, but most carriers will require 60% – 75% of your eligible employees to join the plan.  Without a participation requirement, many times the older employees with high utilization are the ones who join the plan.  Carriers also want younger, low utilization employees to help offset their claim exposure.

Eligibility – For a company to be eligible for a group health insurance plan, their employees must meet certain guidelines.  Employees must work at least 30 hours per week, and be paid with as a W-2 employee.  Most carriers will not allow independent contractors to be covered.  Most carriers will also not offer coverage to a company that is just a husband and wife.  There needs to be at least one full time, W-2 employee who is not the owner, or the spouse of the owner.

Plan Selection – Depending on your state, you are considered a “small group” if you have either less than 100 or less than 50 employees.  Small group plans are all categorized within a metallic tier: Bronze, Silver, Gold, or Platinum.  Bronze plans are the least expensive and have the highest deductibles/copays, while Platinum plans are the most expensive and have the lowest deductibles/copays.  I recommend any new plan to consider offering a Silver level plan as an initial offering.  Silver plans will have a deductible that must be met for certain services, typically hospital stays, surgeries, emergency rooms, and ambulances.  But day to day services like office visits, lab work, and prescription drugs are often covered at a flat copay.  This gives your employees the ability to stay healthy, while not breaking the bank on premium.

Compliance – Offering a group health insurance is a great thing to do for your employees, but it does create new compliance requirements for the employer.  ERISA, COBRA, FMLA, and other regulations come into play when you start offering a group health insurance plan, which is why it’s always best to work with a professional broker when administering a health plan.  Here at AMPED Insurance, we provide you with HR and Compliance Tools to make sure your business any and all regulations you may face.

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