Group health insurance is a critical component of many employee benefits packages, providing essential coverage for workers and their families. As an employer with less than 50 full-time employees, understanding the ins and outs of group health insurance is still crucial to attracting and retaining top talent while promoting the well-being of your workforce.

And, while you may not be required to offer health coverage options to your workforce, doing so has multiple benefits for both you and your employees.

However, not every business owner has had to deal with group health insurance and the whole subject can seem complex and confusing. The good news is that owners need only understand the essentials such as the basics of group health insurance, its benefits, and how to make informed decisions when offering it to your employees.

What Is Group Health Insurance?

Group health insurance is a type of health coverage that employers offer to their employees as part of their overall compensation package. Unlike individual health insurance plans, group health insurance provides coverage to a group of people, typically employees and their dependents.

These plans are designed to spread the risk across a larger pool of individuals, which often results in lower premiums compared to individual plans.

a doctor handing a clipboard to the person next to her

Key Components of Group Health Insurance

While it is possible to take a deeper dive into the variety of components and options that make up health insurance coverage, most owners need not immerse themselves in that amount of information. However, to help you gain an essential understanding of group health insurance fully, here is a breakdown of the key components:

  • Premiums

The premium is the amount of money paid to the insurance company to maintain the coverage. In group health insurance, the premium is often shared between the employer and employees, with the employer typically covering a portion of the cost.

  • Coverage Options

Group health insurance plans come in various forms, including Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Exclusive Provider Organizations (EPOs). These options determine the network of healthcare providers, and the level of flexibility employees have in choosing their healthcare providers.

  • Benefits

Group health insurance plans typically cover a range of essential healthcare services, such as doctor visits, hospital stays, preventive care, prescription drugs, and sometimes dental and vision care. The specific benefits can vary depending on the plan.

Deductibles are the amount employees must pay out of pocket before the insurance plan starts covering costs. Copayments are fixed amounts employees pay for specific services, such as doctor visits or prescription medications.

  • In-Network and Out-of-Network Coverage

Group health insurance plans often encourage employees to use in-network providers by offering lower costs for services received within the network. However, some plans also provide out-of-network coverage, albeit at higher costs to employees.

There are, of course, several other components that make up group health insurance, but these are the critical elements you should understand.

The Benefits of Group Health Insurance

A we noted briefly at the start of this article, there are many benefits to offering health coverage as a smaller business. In fact, group health insurance offers several distinct advantages for both employers and employees. Here are four the main ones:

  1. Cost Savings

Group health insurance plans are typically more cost-effective than individual plans. Employers can negotiate better rates with insurance providers due to the large number of individuals covered under the plan.

  1. Attracting and Retaining Talent

Offering group health insurance can help employers attract top talent and retain valuable employees. Competitive benefits packages, including health coverage, demonstrate a commitment to employee well-being.

  1. Tax Benefits

Employers may be eligible for tax incentives when providing group health insurance to their employees. These tax benefits can help offset the costs of offering this essential benefit.

  1. Employee Health and Productivity

Access to healthcare through group insurance plans ensures that employees receive necessary medical care when they need it. This, in turn, can lead to a healthier, more productive workforce.

Other benefits include improved employee morale and a stronger competitive edge for owners. Employees also benefit from having access to comprehensive coverage and affordable plans.

a man in a doctor's coat holding his hands out with a silhouette of a family floating between them

Making Informed Decisions

When offering group health insurance to your employees, it’s essential to make informed decisions to meet both your business needs and your employees’ health requirements. This involves taking a number of essential steps. 

First of all, it is critical to evaluate your budget. Determine how much your business can allocate to cover the costs of group health insurance premiums. And consider the balance between what the employer and employees will contribute.

Choosing a plan design that best suits your workforce’s needs is also essential. Consider factors like the number of employees, their demographics, and their healthcare preferences. You may offer multiple plan options to accommodate different needs. It can be a major help to work with an insurance broker or consultant to explore different insurance providers and their offerings. These professionals can help you compare plans, negotiate terms, and find the most cost-effective solution for your business.

Once you’ve selected a group health insurance plan, it’s important to educate your employees about the benefits, coverage, and enrollment process. Clear communication can help employees make informed decisions about their healthcare.

Health insurance regulations and offerings can change over time. Consequently, you or your HR person should stay informed about any updates or changes to your group health insurance plan to ensure it continues to meet your employees’ needs.

Group health insurance is a valuable benefit that can positively impact your business and the well-being of your employees. By understanding the basics of group health insurance and making informed decisions, you can provide comprehensive coverage that attracts and retains top talent while promoting a healthier, more productive workforce. Consider group health insurance as an essential investment in your employees and the success of your business – not simply a burdensome “expense”.

Group Health Insurance: Planning Your Next Steps

Lewis exclusively provides California health insurance plans from top-tier carriers that are fully licensed to operate within the state. Our certification and licensing with each carrier enable us to offer comprehensive coverage to small businesses. In addition, we are able to help seniors seeking Medicare supplemental and prescription drug plans.

For small business owners seeking to offer their employees insurance options, we want you to know that we understand the multitude of concerns that can arise. At J. C. Lewis Insurance Services, we offer our expertise to guide you through the entire process, including initial setup, annual renewals, and ongoing maintenance requirements.

Whether you have inquiries about Small Group Insurance (1-50 Employees), the Small Business Health Options Program (SHOP), or any other questions typically encountered by employers, rest assured that J. C. Lewis Insurance Services is dedicated to assisting you in finding the ideal solution.