Giving your employees health insurance as a group isn’t just a nice-to-have these days; it’s a smart way to invest in your team and your business. It can be hard for small business owners to figure out all the different health perks available. But knowing the basics of group health insurance can help you make choices that are good for your business and your workers.
What Is Group Health Insurance?
Group health insurance is a single policy issued to a group, typically a business with employees. It covers eligible members and often their dependents under one plan. Because the risk is spread across a pool of people, group plans generally offer lower premiums and better coverage than individual health insurance options.
For small businesses, providing group health coverage not only improves employee well-being but also boosts morale, reduces turnover, and enhances recruitment efforts. Many job seekers prioritize health benefits, so offering them gives your business a competitive edge.
Who Qualifies for Group Health Insurance?
To be eligible for group health insurance, a business typically must employ at least one full-time employee other than the owner or their spouse. Some states allow coverage for sole proprietors, but most require at least two people. Additionally, your business must be legally registered and in good standing with the IRS and local government.
Employees usually need to work at least 30 hours per week to be eligible for coverage. Part-time and seasonal workers may not qualify, though some businesses choose to offer additional options for those employees.
Understanding the Costs: Rates Vary for Small Businesses
“How much will it cost?” is a question that small business owners often have. The answer isn’t straightforward. Rates vary for small businesses based on several factors:
- Location: Insurance rates differ by state and region due to the cost of living and local healthcare markets.
- Number of Employees: Generally, the more employees you cover, the lower your average premium cost per person.
- Age and Health of Employees: Older workforces may incur higher premiums, although many group plans don’t factor in individual health conditions due to the Affordable Care Act.
- Type of Plan Chosen: Premiums can vary widely depending on the deductible, copays, coverage level (e.g., Bronze, Silver, Gold, or Platinum tiers), and provider network.
It’s also important to note that as an employer, you’re typically required to cover at least 50% of the employee’s premium. Many businesses choose to contribute more as a benefit.
Tax Advantages of Offering Group Health Insurance
It may also be tax-wise for you to give health insurance to a group. Most of the time, companies can write off the money they pay their workers’ fees. You might also be able to get the Small Business Health Care Tax Credit if your company has fewer than 25 employees and meets certain requirements for pay and coverage.
This credit may be worth as much as half of the fees that were paid. It makes it easier to give health insurance and lowers the cost of it.
Choosing the Right Plan
When selecting a plan, consider what matters most to your employees — whether it’s access to a wide network of doctors, lower out-of-pocket costs, or comprehensive benefits like dental and vision.
Work with a licensed insurance broker or benefits consultant to compare options and tailor a plan that aligns with your team’s needs and your budget. Many platforms also allow you to manage enrollment and compliance digitally, making administration easier.
Final Thoughts
Offering group health insurance is a meaningful step toward fostering a healthy, loyal, and productive workforce. It may seem complex at first, but understanding that rates vary for small businesses and exploring the flexible options available can help you find the right solution.
With the right plan in place, you’re not only protecting your employees, you’re investing in the long-term success of your business.
