How a small business health insurance plan can help
If you own or belong to a business or organization of between 2 and 50 people, chances are you qualify for (and would benefit from) a group health insurance plan.
Small business health insurance has lots of benefits. Besides providing medical care for yourself and your employees, a small business health insurance plan helps spread the financial risk between all the members, which usually means lower premiums and more extensive coverage for everyone.
But group health insurance has tax advantages too. Employer contributions to a small business health insurance plan are generally 100% tax deductible, and employees save on payroll taxes.
Small businesses (and certain organizations, like non-profits) are generally eligible for group health insurance so long as they can show two or more full-time taxable employees.
How group health insurance works
A small business health insurance plan provides its members with a set coverage with rates calculated using the group and individuals. Employees may be able to add policy riders and additional coverage to fit their specific needs, but the basic policy format will remain the same.
Likewise, although small business health insurance comes in a variety of shapes and sizes (fee-for-service, HMO, PPO, POS), the format that's chosen will apply to all members. (And although it is technically possible to purchase a group indemnity policy, the managed care plans are much more common.)
Although rate calculations vary both from state to state and from company to company, the cost of a group health insurance plan is based on the characteristics of each member, including:
- age
- health status
- occupational hazard
- business and/or residential location
Employees of a business that offers group health insurance are not compelled to join the plan, but the group must maintain a minimum number of insured (as few as 2 people, depending on the policy) to guarantee coverage.
