Health insurance is vitally important but it can prove to be one of the most expensive recurring financial obligations for people from all walks of life. As a consequence, women and men find themselves exploring different avenues through which they can obtain suitable health insurance coverage for the most reasonable cost possible. One type of coverage that is often more affordable overall is small business group health insurance. There are a number of important reasons why a small business health insurance policy for a group is more affordable than an individual health insurance policy.
A key reason why a small group policy through an employer is less costly for a worker is because the employer typically picks up part of the premium cost. Depending on the number of employees a business has, federal law may mandate that an employer pay for a percentage of the premium for health insurance. Pursuant to existing federal law, an employer with 50 or more employees must pick up at least 50% of the health insurance premium cost for its employees. A notable number of enterprises will pay more than 50% of health insurance premium costs for their workers.
The overall premium costs associated with small business health insurance are less than that for individual health insurance policies. The average annual health insurance premium for a worker covered by a small business group insurance policy clocks in at over $5,000, according to the National Association of Insurance Commissioners. Moreover, this is a dollar amount that has been on the rise with each passing year. This average individual health insurance premium amount is for a relatively basic policy. Such a policy is apt to have rather high deductibles and co-pay obligations.
There are some notable tax benefits to both an employer and an employee via a small business group health insurance policy. On the employer’s side of the proverbial fence, the business contribution to the premium is not subject to federal taxes. In other words, unlike wages and salary paid by a business to a worker, a business doesn’t pay taxes on money contributed to an employee’s health insurance premium.
An employee enjoys a tax benefit via a group health insurance policy as well. An employee is able to pay his or her share of a group health insurance premium using so-called pretax dollars. Through a group policy and payment of premium share via pretax dollars (usually arranged through an optional health savings account [HSA]), an employee’s overall tax obligation is reduced each year.
Many people find searching for suitable health insurance coverage a complicated and even frustrating endeavor. When business group health insurance is available, the employer does the research to find the most suitable coverage or policy for the team.
Though an employer is responsible for researching available health insurance options, it doesn’t mean that a business pays no attention to the opinions and suggestions of workers. As part of the process of selecting a small business health insurance policy, an employer typically undertakes a rather comprehensive census of its employees to better identify what workers are seeking in the way of health insurance coverage.
If a worker has an individual health insurance policy, that coverage continues whether or not the individual leaves an existing employer. However, when a worker leaves an existing employer who provides health insurance doesn’t mean that he or she automatically is uninsured.
First, a worker is likely to be able to continue coverage through a federal law: the Consolidated Omnibus Budget Reconciliation Act of 1985(COBRA). However, the former employee pays the full cost of the health insurance premium. Moreover, COBRA remains in place for only a specified period of time.
Second, a worker is able to obtain health insurance coverage through the marketplace if a work separation occurs. This can occur whether or not the annual open enrollment period is ongoing.
When seeking health insurance coverage, both employers and employees are wise to conduct comprehensive due diligence before making a selection. By being conscientious in this manner, a business ensures that it obtains the most beneficial as well as the most affordable health insurance for its workers. Similarly, by undertaking comprehensive due diligence, an individual is able to intelligently determine what route makes the most sense, including a consideration of individual and small business group health insurance options.