| Purchasing For Your Business |
| Written by Samuel Blue | |
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Group health insurance is an important fringe benefit for most employers that can be helpful in terms of recruitment and retaining employees. Employer provided group health insurance is beneficial for employers and employees in that it provides employers with a tax write off and employees are not taxed for the compensation they receive as their employer's contribution to pay for group health insurance coverage.
Rising health insurance costs have made purchasing group health insurance a more expensive proposition for businesses, particularly small businesses in recent years. According to studies, between 1996 and 2002, the average health insurance premium rose by more than 60 percent. As employers usually pay the lion's share of the premiums for their employees health insurance, increasing rates can have a serious impact on a business' bottom line. If you're the owner of a small business seeking to provide health insurance benefits for your employees, you should do a considerable amount of research to determine what insurance plan is right for you and your employees, and what tax or other incentives can help you with the cost of providing group health insurance for employees. When you purchase a group health insurance policy, your insurer will evaluate your business and employees to determine how much they should charge for coverage. Bigger groups get better rates, so it may be beneficial for small business owners to join a trade association and try to obtain group health coverage through the association because of the larger status of the insured pool in such a circumstance. Group health insurance rates can vary greatly from state to state. Regulations concerning what insurers can use (i.e. age, health history, industry, gender) as a basis for exclusions or rate modifiers is widely different among the 50 states, thus impacting price. For example, in many states, factors such as age and gender cannot be used in pricing, while in others insurers have greater leeway in what factors they can use in pricing a policy. Many states offer tax incentives to small businesses that purchase group health insurance coverage for their employees, so check with an accountant to see if there are any advantageous tax deals available before purchasing coverage. Another factor that can impact the price of your plan is the type of plan your purchase. The most expensive plans are typically indemnity plans, which pay costs no matter what provider the insured chooses. Cheaper options include plans that allow insureds to only choose providers from a list of providers who have agreed to provide services to the insurers' clients at a discounted rate and high deductible plans which require insureds to pay large deductibles on their own before receiving coverage. The specific health conditions of your employees can have a substantial impact on the rates you and your employees pay for coverage. In some states, regulations called community ratings make all persons equal with regard to pricing. In states without community ratings, rates may swing wildly between employers with employees who have multiple health conditions and employers with employees who have few health conditions. In general, health insurance plans with high deductibles tend to have lower premiums than lower deductible plans, but the high deductible plans may discourage your employees from purchasing the insurance. Conversely, plans with high premiums may be even more off-putting with employees. That's why it is important to consult with employees regarding their needs before purchasing a plan. Also, it's important to note that the actual price you pay for insurance may vary wildly from the quote you receive from an insurer. As the insurer surveys you employees during the underwriting process, it may find conditions and circumstances that result in higher rates. When purchasing group health insurance coverage for a small business, it's advisable to retain the services of an insurance broker. A broker can help find a policy at an advantageous rate for your business. Using a broker is likely not to cost more than buying a plan outright through an agent, as the agent's fees are typically included in plans usually equate to the price a broker will charge you for his services. Offering health insurance coverage is a good investment to improve employee loyalty and productivity, as healthy, happy employees are likely to contribute more to your business than sick and disgruntled ones. Finding a health plan that's affordable for both you and your employees is vital to achieving this goal, however. |
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