How Group Health Insurance Helps Businesses

Most successful businesses offer their employees’ health insurance. However, they might not always be doing it the best way. The solution to this is group health insurance plans.

Group health insurance plans help to keep costs down while also providing owners with more flexibility. In this post, we ask what group health insurance is and how it can help companies get closer to their goals.

What Is Group Health Insurance?

Group health insurance plans provide coverage to a group of employees or members of an organization. The individual cost of each policyholder is lower because the insurer can spread risk over everyone. While it is likely that one employee may end up in bad shape health-wise every year, it is unlikely that ten will, allowing insurance companies to keep costs low.

How Group Health Insurance Works

Employees cannot buy group health insurance policies individually. Instead, they sign up to insurance plans managed by their employers. Most require at least 70 percent participation to be valid. There are many types of plans, terms and conditions, and no two are ever the same.

Once an organization or company sets up group health insurance, it’s then up to individual members to decide whether they want to accept the policy. Naturally, most workers will accept it, as it’s a valuable perk.

Plans come in tiers, like regular health insurance products. Basic health coverage provides coverage for all essentials, such as things patients need to overcome diseases, while premium insurance may add cosmetic procedures or experimental treatments.

Some plans may also extend health insurance coverage to the worker’s family, including their spouse and children up to a certain age. This feature may be a standard element of the policy, or an add-on.

Benefits of Group Health Insurance

There are many ways group health insurance plans can benefit businesses. These include:

Improve Morale and Productivity

Working for a company that doesn’t provide adequate health insurance can be a depressing experience for many workers. They’d like to believe that their employer cares about them enough to offer coverage, but sometimes they don’t.

Offering group health insurance improves employee relations. With health coverage, employees can’t say that you don’t care about their wellbeing. In fact, you’re proving that they matter to you while also giving them peace of mind.

Keep Quality Workers

With the great resignation in full swing, holding on to your best workers is more challenging than it ever was in the past. Everyone these days believes that the grass is greener on the other side (even if it isn’t).

In a job market like this, whether you offer health insurance is a big deal. Companies that offer health insurance are often seen as much more desirable by employees than those that don’t. It means that workers don’t have to pay out of pocket for their own health insurance, which is often much more expensive individually.

Keep Costs Down

As mentioned above, paying for employee health insurance individually is expensive, but when firms group workers together into a single policy, it becomes much cheaper. Insurers charge lower premiums because the risk is more predictable. Even if one employee has some dreadful chronic disease that requires constant medical attention, the chances of something similar happening for the rest is low.

Sometimes, insurers can lower their costs further through health management organizations (HMOs). These entities create contracts with insurers to provide a certain level of care to members. The benefit is lower prices, but the downside is that employees may have less choice over their care and which doctor they choose.

Organizations that want to offer their members more choice might want to opt for preferred provider organizations (PPOs). These give patients more options for the medical care they receive, but the price is higher.

Secure Your Company for The Future

Most business experts recommend companies get established first before offering their employees group health insurance. This avoids paying out high premiums and running down your capital too quickly.

However, if you operate a more established brand, then getting group health insurance can actually help you survive over the long-term. Businesses should aim to hold on to their best and most knowledgeable people, and health coverage can help achieve that. It’s harder for people to jump ship when they already have the benefits that they need.

How Much Does Group Health Insurance Cost?

Group health insurance is expensive, but it costs considerably less individually than what an employee would pay in premiums otherwise.

The average cost of a group health insurance policy is $7,400 per member per year. Employers foot 80% of the bill, on average, with employees contributing the rest.

What Does Group Health Insurance Provide?

Group health insurance provides many of the same benefits to organization members as conventional health insurance. Policies typically cover regular medical care plus dental, vision and pharmacy services. Sometimes, you pay for these add-ons separately, but most insurers will include them in a bundle.

How Many Employees Do You Need To Qualify For Group Medical Cover?

You don’t need to be a big business to qualify for group medical insurance. Most insurers will cover firms with over one employee. Therefore, even if there are only two of you, you can still get a group insurance policy, and then expand it as you hire more people to your firm.

The size of your business depends on the type of plan you’re on. Coverage tends to become more comprehensive as the number of people on the policy goes up. For instance, insurers might offer a low level of coverage for organizations with fewer than ten members, but much more coverage for those with more than that. As a business leader, it’s up to you to read policy documents and decide which is best for your firm.

For more information on best insurance practices for your business, visit our blog.