Find the Best Group Health Insurance for Your Client
A great way to attract new clients and retain your current client base is to offer your clients help with their health insurance options. Health insurance protects clients financially in the case of injury or illness. Alongside retirement plans, health insurance is considered one of the most important benefits of employment. Businesses effectively have to provide quality health insurance coverage for employees to compete in today’s market.
Since the implementation of the Affordable Care Act (ACA), many find it challenging to navigate the current options. By far, the most common of these options is employer-sponsored or group health insurance. Recent data shows that group health insurance covers nearly half of all Americans.
What is group health insurance?
Group health insurance is a type of private health insurance product offered by an employer to employees. In other words, a business or other employer purchases a health insurance policy and offers coverage under the policy to employees. The employer is the policyholder, and they make all the decisions about the specifics of the plan. The employer has the option of offering a single plan or offering multiple plans. Group health insurance is commonly considered the most significant employer-sponsored benefit. It is a primary factor for businesses when shopping for benefits packages for their employees. Because group health is such a powerful tool for attracting talented employees, employers commonly pay 50% or more in premiums. With employer-provided health insurance, the organization must contribute a minimum percentage, and employees pay the remaining amount, usually through a payroll deduction. This minimum percentage in Texas is 50%; however, this amount is waived during Open Enrollment (groups enrolled effective January 1st), and there are no requirements for how much an employer must contribute.
Employer-paid premiums for health insurance are exempt from federal income and payroll taxes. Additionally, the portion of premiums employees pay is excluded from taxable income. The exclusion of premiums lowers most workers’ tax bills and thus reduces their after-tax cost of coverage. This tax subsidy partly explains why most American families have health insurance coverage through employers. Additionally, the portion of premiums employees pay is typically excluded from taxable income.
What are the different types of group health insurance plans?
Whatever the size of the business, there are health plans that help you create a healthier and more productive workplace that attracts and retains top talent.
Also known as small business health insurance, small group health insurance is available to businesses with two to 50 employees.
Large group health insurance is for any business that has more than 50 eligible, full-time employees.
Employers in either category that purchase group health insurance can choose to offer employees a single plan or multiple plan options. Two of the most common available plans are PPO and HMO:
Preferred Provider Organization (PPO) plans offer the most flexibility and the greatest range of options where the insured can receive treatment. PPO plans provide coverage nationwide and allow you to visit specialists without needing a referral. Some healthcare facilities accept only PPO plans.
Health Maintenance Organization (HMO) plans tend to be less expensive than PPO plans. They are more restrictive. With HMO plans, the insured individual must choose a designated physician, known as a primary care physician (PCP), and get referrals before visiting specialists. Many states restrict HMO plans to coverage in-state, which can cause issues during travel.
How is group health insurance different from other health insurance policies?
Group health insurance is distinct from individual health insurance in that a business is the master policyholder. For employees, that means that coverage is tied to employment and is not portable. In other words, if an employee leaves for any reason, whether they quit, retire, or terminate employment, they will lose coverage under the group plan. The Consolidated Omnibus Budget Reconciliation Act (COBRA) may give workers the option to continue coverage after leaving an employer under some circumstances. It may last up to 18 months after leaving a group health insurance plan.
Group health insurance is a private-sector plan type. Medicaid and Medicare health insurance policies are funded and managed by the government. In the case of Medicare, you must be 65 or older.
What are the benefits of group health insurance?
For employees, group health insurance is almost always the best option because their employer is likely to pay a large part of the premiums, making the overall cost cheaper than individual plans. It is also common practice for group health plans to allow employees a choice from a selection such as PPO, HMO, and other options. They are generally more comprehensive in their coverage.
For employers, group health insurance is a tremendous investment. Competitive benefits are a must for attracting high-quality employees. Health insurance is considered an imperative employer-sponsored benefit, and group health is attractive because it offers PPO and flexible enrollment schedules. If employers pay 50% of employee premiums, they can write off the expenses on their taxes.
For small businesses, group health plans can be a tempting way to get quality coverage while reaping the tax benefits of purchasing the plan. As long as a business has two or more eligible, full-time employees, they can buy a group health policy. Many small businesses choose to cover 100% of the premiums, while others offer employees an allowance of around $500–600 to cover premium payments. In that case, employees can choose to purchase a more expensive policy and pay the difference out of their paycheck.
Is group health insurance right for my client?
If your client is offered employer-sponsored health insurance as part of a benefits package, it is very likely their best option. The employer may offer a choice of different plans with varying costs and coverage. Whether your client should choose PPO, HMO, or another option depends on their specific situation, including their lifestyle, goals, and budget.
There are situations in which an employee may decline employer-sponsored coverage. A specific example is if the employer is not covering any of the premiums. Another is if the employee already has an individual HMO plan and is comfortable with their current plan and designated physician. Finally, clients 65 and older who are eligible for Medicare may not need the additional coverage offered by their employer.
If your client is an employer, you should bring up group health insurance. Employers today must offer medical insurance if they hope to be competitive in recruiting staff. For small businesses and practices, such as attorneys, doctors, and financial advisors, setting up a group health insurance plan can be the best way to get coverage.
However, the complexity and cost of the health insurance market can be intimidating. You and your client should understand some basic rules of group plans. For example, the employer must cover 50% of the premiums, and at least 75% of eligible employees must participate in the group plan or have coverage elsewhere. They must also have at least two eligible full-time employees and have the ability to prove the business is legitimate. With expert help, these requirements are easy to navigate and well worth the effort.
Frequently asked questions about group life insurance.
How many employees do you need to qualify for group health insurance?
You must have at least two eligible employees to get a group health insurance plan. Eligible employees are actively employed full-time, which is defined as working 30 or more hours each week.
What happens to group health insurance when your client leaves their job?
If an employee covered through a group health insurance policy leaves their job for any reason their coverage is terminated. In many cases, they can retain coverage through COBRA for a limited period by covering 100% of the premiums. However, if they are 65 or older, they can apply for Medicare.
What happens to group health insurance when your client retires?
Typically if they are retiring, they may be eligible for Medicare and will no longer need group coverage. If they are under the age of 65, they will need to look into COBRA or an individual HMO plan until they turn 65.
Is it possible to combine different types of health policies?
No. You are only able to purchase one major medical health insurance plan at a time. You may, however, buy plans that help offset the deductible. You may also purchase plans providing coverage where your major health insurance plan may fall short.
How do I find the best group health insurance policy for my client?
The purpose of health insurance is different for every client. When helping your client choose among the employer-sponsored plans, you need to look at their specific situation and consider their goals, finances, health, and lifestyle. Although group health plans are the best option for most people, you still want to weigh all the options, including Medicare and Affordable Care Act individual plans.
When working with a business or other employer, consider factors such as the number of employees, the budget, and the other benefits they offer. While your client may be interested in the cheapest possible plan, the quality of what they ultimately offer their employees will affect enrollment. Choosing a policy that does not appeal to employees can jeopardize your customer’s eligibility by lowering employee enrollment.
An insurance brokerage agency can help you and your client work through all these details and more. While it may seem logical to go directly to an insurance carrier like Blue Cross Blue Shield, the process can be tedious and complex. For example, it is not uncommon to get rerouted to several different departments before finding help. Once you purchase the policy, there may be unexpected maintenance items required when hiring new employees, which is best done by a brokerage agency and not a carrier.
Moreover, working with a broker will not cost you anything. Insurance carriers compensate brokerages for providing auxiliary services to clients. So let a broker shop the market for you and select from a wide range of products and insurance carriers that meet your customers’ needs. Working with a health insurance brokerage can be the difference between purchasing a policy tailor-made for your client or an inferior product that will not provide the needed coverage.
How do I find the best group health insurance broker?
When shopping for group health policies, you will want to seek out insurance brokerages that not only understand the market but are there to provide back-end support throughout the life of your policy. One of the best ways to find brokers is to ask your network for referrals. You can also connect with NAILBA, a leading insurance industry organization promoting consumer choice.
You can also do your research by prospecting several insurance brokerages in your area. We recommend looking for these qualities in a broker:
- Responsiveness and attentiveness. Are they knowledgeable of the products and solutions available to serve you and your clients’ needs?
- Back-office support. What happens after a term life application is submitted?
- A good team instead of just a good salesperson: make sure that the service is as good as the pitch. Service can make or break a relationship.
- Do the owners invest back into the agency or focus on paying themselves?
You can also learn a lot about the brokerage by calling them up and asking pertinent questions, such as:
- How long have you sold group health insurance?
- Have you had any complaints with the state?
- Who are your primary carriers?
- What are the carrier ratings?
- What types of products are the affiliate carriers selling?
Do your homework and determine if the brokerage gravitates towards products with the most commission. Most importantly, visit the agency. Do an onsite visit and speak with the brokers in person.
EMG Insurance Brokerage can help.
As a brokerage general agency, EMG Insurance Brokerage handles everything from submission to commission. Our relationships with over 30 carriers allow us to help choose the best carrier for your client based on the purpose of coverage, underwriting obstacles, and type of product. We will walk you through the process and have the ability to tailor solutions to the unique needs of each client.
We have a dedicated group health department ready to help you throughout the life of your policy. Whether your client is purchasing a policy for the first time or needs help managing enrollments, we are here to make the process seamless.
We will take your client’s census annually, review their current policies, and shop the market to come back with a competitively priced benefit package tailored to their needs. We provide group insurance to over 900 businesses every year.
Our agents pride themselves on their ability to get your questions answered in a timely fashion. We keep our agents informed so they are up-to-date on what is happening in the health insurance marketplace.
You will have access to a dedicated case manager that will follow your case from submission to final approval and placement.
This highly personalized approach gives us the ability to tailor solutions to each client. Connect with us by phone, online, or in-person, or schedule a consultation with your sales director today on how to grow your business.