Are you just getting started, and want to take advantage of group rates that can be lower than individual rates? Group Health Insurance plans can cover down to just one person – you! Having Group Health Insurance as an option, helps attract and keep qualified job candidates. This helps reduce employee turnover and helps grow your company!
The primary advantage of a group plan is that it spreads risk across a pool of insured individuals. The benefits of this to group members are helping keep premiums low and aid insurers better manage risk. Insurers can exert even greater control over costs through health maintenance organizations (HMOs), in which providers contract with insurers to provide care to members. The HMO model tends to keep costs low, at the cost of restrictions on the flexibility of care afforded to individuals. Preferred provider organizations (PPOs) offer the patient greater choice of doctors and easier access to specialists, but tend to charge higher premiums than HMOs. The vast majority of group health insurance plans are employer-sponsored benefit plans. EBS provides several options to help you make the right choice.
Types of Insurance Plans
HMOs, or Health Maintenance Organizations, provide managed care for insurance companies. HMOs cover services of doctors who agree to treat patients under HMO guidelines. Under HMOs, individuals usually select a primary care physician in order to see other doctors or specialists. In order to see other doctors or specialists you must get a reference by your primary care physician. Referrals are subject to HMO Plan rules, that deems services necessary or not.
PPOs (Preferred Provider Organizations) are based on a subscription and the employee can visit any network doctor, no referral necessary. Doctors and hospitals work with insurance plans in order to provide care at reduced rates. Most PPO plans also allow you to visit a non-network doctor, but you pay a higher deductible and/or Co Pay.
HSA plans with high deductibles are also becoming popular. Since premiums can be significantly lower than a PPO, the employee can set up a qualifying bank account to make contributions from which they pay the expenses that fall within the deductible. Contributions to the HSA that are not used in the calendar year are rolled over to the next year.
Reasons to Purchase Group Coverage:
Better Employee Recruitment and Retention
Besides offering access to affordable health services, group coverage also helps businesses in ways relating to employee retention and tax benefits. The main ways that purchasing a group policy can benefit you, your business and your employees are:
Better Access to Care
People who have health coverage are in a better position to obtain medical care, including preventive services that may help avoid more serious health problems down the road. Having health coverage encourages people to actively maintain their health and improves their access to services that may otherwise not be affordable.
Manageable Costs and Financial Security
Besides the health benefits that come with improved access to care, health coverage also ensures that the costs for services will be manageable. People with health coverage are protected financially from burdensome debts arising from major illnesses or injuries. The need for medical services often arises unexpectedly, and the costs typically exceed what most people can afford or want to pay.
Tax Benefits for Your Business
Generally speaking, any expenses an employer incurs related to health insurance (for employees or for dependents) are 100% tax-deductible as ordinary business expenses, on both state and federal income taxes. Beyond this general rule, taxes get a bit more complicated. It is possible to set things up so that your employees save tax money. With just a little paperwork on your part, an employee can contribute to the cost of health insurance on a pre-tax basis. That means you deduct the cost of the premium from the employee’s paycheck before state and federal taxes are calculated and deducted. This increases the employee’s take-home pay and lowers the amount of the employee’s taxable income.
Employers should also be aware that the Affordable Care Act offers small businesses healthcare tax credits to help offset the cost of insurance.
The small business healthcare tax credits have been available since the 2010 tax year. To qualify for a tax credit of up to 50% of premium expenses for any two years, small business owners must pay at least half of employees’ healthcare premiums and have 25 or fewer full-time equivalent employees who earn an average of $50,000 or less per year.
To see whether you qualify for the tax credit and to find out how it is calculated, visit “Small Business Tax Credit”.
See “Tax Implications” for more information on the tax rules involved in offering health coverage, along with tips on how to structure your health plan offering in order to maximize tax benefits for you and your employees.
Better Employee Recruitment and Retention
Businesses that offer group medical coverage report there are several advantages to doing so. Having group medical coverage may:
- Lower your hiring costs. Looking for, hiring and training new employees takes time and costs money. Having insurance helps you to recruit and retain talented employees.
- Reduce absenteeism and decrease risks associated with poor health in the long run. When employees don’t have health insurance, they wait longer to seek treatment, which can lead to the need to stay home from work or go out on disability. Healthy employees are less likely to injure themselves and more likely to do their jobs well.
- Enhance your office atmosphere and improve morale. Employees tend to be happier and more satisfied with their jobs when they are offered group insurance.
- Some small employers indicate that their employees will accept slightly lower wages if those wages come with health insurance.
- In addition, employees can benefit tax-wise (see Tax Benefits above) and convenience-wise by paying premiums right from their paychecks.
In a small business health benefits survey,* a majority of small business owners reported several positive effects of offering health insurance for their employees:
- 78% said it increased loyalty and decreased turnover.
- 75% said it helped employee recruitment.
- 64% said it increased productivity by keeping employees healthy.
- 62% said that employees demanded or expected health insurance.
- 58% said it reduced absenteeism by keeping employees healthy.
On the flip side, only 25 % of employers who did not offer health benefits responded that they thought not offering health insurance had no impact on their business.
*Source: Blue Cross and Blue Shield Association Analysis of 2002 Small Employer Health Benefits Survey, sponsored by the Blue Cross and Blue Shield Association (BCBSA), the Employee Benefit Research Institute (EBRI), and the Consumer Health Education Council (CHEC).
At EBS, with over 25 years of experience, we stand ready to help you find a policy that is both affordable and fits your needs.
Call us today!