Small Businesses Should Consider Group Health Coverage Plans
Updated: Oct 13, 2021
There is so much that goes into starting and growing a small business. One concern that many employers have is the health insurance plan. Getting insurance through a company is one of the most common ways a person can pay for medical care.
Many people look for a job site that has coverage as one of the employee benefits. As a small business owner, you may decide that buying insurance for staff members is the right choice for you. You may come across various options on the market.
One of the options available is group health insurance. This type of plan is a suitable choice for many small businesses. Group coverage is an advantageous option for employers and employees.
Why Are Group Plans Important For Small Businesses?
Once you have started your business and hired some employees, the next thing you might be considering is health insurance. Along with a lot of other decisions, health insurance is a financial piece of the company’s growth plan. Over time, an owner might find themselves having to hire more employees to keep operations running smoothly. More workers mean an increased need for some type of benefits package.
A competitive benefit package is critical for the growth of any business. A health insurance plan is necessary for recruiting and keeping adept employees. People want to know they will get as much support from a business as they are putting into it.
Compensation is an influencing factor for younger generations. Studies have reported that 60% of Gen Z and 65% of Millennials said they would accept a lower starting pay in exchange for better benefits. Since the average Gen Z is in college, the two generations will soon make up the majority of the workforce.
Another reason why a small business may want to provide health insurance is that the law requires it. Under the Affordable Care Act, employers need to offer an insurance plan that is affordable and gives at least minimum value to full-time workers. Otherwise, the owner has to make an employer shared responsibility payment to the IRS.
However, not every business has to follow the provision. The mandate only applies to companies with at least 50 full-time employees.
The Difference Between Group Insurance and Individual Insurance
When you are looking over what type of health insurance to offer employees, you may wonder what will and will not work. You might come across two categories of options when looking over the various plans on the market. What is the difference between individual insurance and group insurance?
Individual insurance is a plan that an employee or their family purchases. They no longer have to pay a potential tax penalty and have more control over the policy they buy. However, the person could end up spending more. Small businesses can find legal ways for their workers to afford individual health insurance.
Another option is for an owner to buy group insurance. Group insurance covers everyone on the team and even their family members. It is divided into big and small group insurance. Companies pay either all or a portion of the price since they can split the expense with staff members. Workers get to enjoy a lower cost since the risk of health insurers gets spread across team members.
Group insurance starts soon after a person gets hired, and individual insurance takes some planning. Each option provides different benefits to workers and companies. It is important to look over each type to see which one works best for your small business.
The Cost of Premiums Remains Stable
Another benefit of group health insurance is the stable costs. Employer-sponsored coverage is the most common type in the United States. The prices of group insurance policies can be lower with the help of an insurance broker. Not only will small business owners get to save money, but they also can relax with the knowledge that the cost is relatively stable.
The rising expense of premiums is a reality for many individuals. However, companies do not have to pay more for the growing policy expenses. The average price for employer-sponsored health insurance is roughly $7,188 for single coverage and $20,576 for family coverage. The average premium for group health plans has increased 22% over the last five years.
Still, group health insurance remains an affordable option for small businesses. An insurance agent can help ensure that rates remain stable and predictable in the upcoming years.