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What is a Level-Funded Health Plan? 

A level-funded health plan is one type of employer-sponsored health insurance that offers business owners more flexibility and savings potential compared to traditional, fully-insured health plans. Level-funded plans are created by combining aspects of self-funded and fully-insured health insurance, helping small businesses manage high healthcare costs, while also providing employees with quality benefits. 

 

Unlike traditional, fully-insurance health plans, with level-funded plans business owners incur some of the financial risks for claims. On the flip side, level-funded plans also present the opportunity for refunds, if claims are lower than expected.

How Do Level-Funded Health Plans Work? 

Monthly Payments

Business owners with level-funded plans pay a fixed monthly premium that covers:

 

  • Their employee’s health insurance claims.
  • Administrative costs (for things like claims handling and plan management).
  • Stop-loss insurance (protection limiting owner liability, by covering the costs of excessive claims that go over the predetermined limit).

Claims Processing

Another great feature of level-funded plans is that business owners don’t have to deal with lengthy, complex claim processes. Instead, the insurance provider or third-party administrator does all the heavy lifting, handling the claims and paying the healthcare provider.

End-of-Year Settlement

At the end of the year, if employee claims are lower than expected, business owners may receive a refund or credit. On the other hand, if claims are higher than expected, stop-loss insurance takes action by covering the additional costs. It’s important to note that if claim amounts exceed the stop-loss coverage limit, business owners have to pay the extra cost out of pocket. 

How Do I Set Up a Level-Funded Health Plan? 

Setting up a level-funded health insurance is pretty similar to setting up fully-insured plan, but has some minor differences: 

 

  1. Assess Your Business Needs: Like any insurance process, before selecting a provider you’ll want to assess your business and employee’s needs. This includes factors such as employee risk factors, budget, number of employees, demographics and expected use of the plan. 
  2. Select an Insurance Provider: Select an insurance provider or work with a broker like EZ.Insure, to select a level-funded plan that fulfills your team’s needs and preferences. Once you’ve selected a provider, they’ll calculate your fixed monthly payment amount. During this process, the provider or broker will also set up your stop-loss insurance.
  3. Customize Plan Options: Just like a traditional fully-insured group health plan, you can choose to offer your employees just one plan or multiple options. This includes your standard plan types such as PPOs, HMOs, HDHPs, EPOs and more. 
  4. Employee Enrollment: After choosing your plan offerings, it’s important to educate your team on the available options, and help them through the enrollment process. For extra help, talk to your insurance agent or provider about holding a brief webinar to walk employees through the steps. 
  5. Track and Adjust: Keep an eye on healthcare costs, plan usage, and claims made. This information will help you determine whether you need to make any adjustments at the end of the year or not. 

To find a level-funded plan that fits your business’s budget and needs, work with EZ.Insure! Our platform offers side-by-side plan comparisons, and personal assistance from licensed insurance agents, so you can be sure to choose a plan that checks all the boxes. To get started, just enter your ZIP code below or call 844-770-0064.

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How Much Do Level-Funded Plans Cost for Small Businesses? 

Level-funded health plans vary quite a bit in price, therefore it is difficult to provide an accurate estimate. With that being said, they tend to be more affordable than fully insured plans, especially if your business doesn’t have a high number of employee claims. 

Factors Influencing the Cost of Level-Funded Plans

  • Business Size and Demographics: The fewer employees you have, the less you’ll likely have to pay per month. Additionally, companies with younger, healthier employees may benefit from cheaper costs. 
  • Type and Number of Plans Offered: Monthly costs may also be affected by the type of plan you choose such PPOs, HMOs or HDHPs. Also, cost may increase if you opt to offer multiple plan options. 
  • Geographic Location: Healthcare costs vary depending on where in the country your business is located. 
  • Claims History: Insurers generally evaluate the claims history associated with a company and its employees. A high number of expensive past claims may increase the overall price. 
  • Stop-Loss Insurance Amount: Since stop-loss insurance is a large contributing factor to level-funded plans, a higher limit usually costs more. 

Why Are Level-Funded Plans a Great Option for Small Businesses?

  • Predictability and Control: Monthly payments are fixed, so there are no surprises. 
  • Healthy Groups Lower Costs: Businesses have the opportunity to save money through end-of-year refunds, if there are less employee claims than expected. 
  • Customization: Just like a traditional health plan, employers can choose from a variety of plan types, benefit structures, coverage levels and networks.
  • No State Taxes on Premiums: In many states, level-funded plans are exempt from premium taxes, helping to lower overall business costs. 
  • Stop-Loss Insurance: Even if employee claims are higher than expected, stop-loss insurance will pay most, if not all of the extra expenses. 

FAQs

What happens if employee claims are higher than anticipated? 

If employee claims go over the allocated claims fund, stop-loss insurance works by covering the extra costs. The only time you’ll have to cover extra claims costs out of pocket is if the amount exceeds the stop-loss coverage limit. 

 

What’s the difference between level-funded and self-funded health plans? 

Level-funded health insurance plans offer fixed monthly payments, while self-funded plans have fluctuating costs based on the actual claims. Additionally, while level-funded plans provide stop-loss insurance to cover the risk of high claims, with self-funded plans, business owners fund large claims themselves.

 

Lastly, with level-funded plans, third-party administrators generally handle claims processing, while self-funded plans require more direct employer involvement. All in all, businesses take on much more risk with self-funded plans as opposed to level-funded plans, where the risk is shared between owners and providers. 

 

What’s the difference between level-funded and fully insured health plans? 

The main difference is that level-funded plans include stop-loss insurance and provide businesses with the chance to save money in the form of refunds if claims are lower than expected. On the other hand, businesses with fully insured plans pay a fixed premium to insurance carriers who assume all of the risk.

 

This means there is no chance of refunds, but also no chance of having to pay extra money at the end of the year if claims are higher than expected. 

 

What is the difference between graded funded and level funded?

While level-funded plans have fixed monthly payments covering claims and other fees, graded funded plans start with a lower premium and gradually increase over time. Both plan types offer potential cost savings in comparison to fully insured plans. 

 

How much can business save with a level-funded plan? 

On average, businesses save anywhere from 5-30% on costs compared to fully insured plans. Businesses with healthy employees, and a low number of healthcare claims save the most with level-funded plans. 

 

Can small businesses qualify for level-funded health plans? 

Yes, businesses with as little as 2 employees qualify for level-funded health insurance.

Get a Level-Funded Plan Today with EZ.Insure!

Level-funded plans stand as an excellent alternative to traditional fully insured health insurance plans. Especially for businesses expecting a low number of claims, who want more control and the opportunity to save money, level-funded plans are the perfect choice. Don’t wait any longer, to give your employees the protection they deserve, instead get started with EZ.Insure today!

 

Our platform offers 24/7 expert assistance, free customized quotes, and our side-by-side plan comparison tool, so you can be sure to get the coverage of your dreams! To get started, just enter your ZIP code below, or give us a call at 844-770-0064.

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Two professionals discussing a small business health insurance plan at an outdoor table, with a clipboard, tablet, and coffee cup in view. The image is branded with EZ.Insure and labeled "Small Business Health Insurance.

 

Small business health insurance, also referred to as group health insurance, provides coverage to a group of participants, typically employees of the same company or members of an organization. This type of insurance usually offers cost-savings, since the risk is shared across multiple policyholders, meaning each member pays less than they would if they purchased an individual plan.

 

The term “small business health insurance,” simply refers to EZ.Insure’s specialization in businesses with less than 50 employees, but even if you own a larger company, we have coverage options for you too!

 

Even if you aren’t required to, you should consider offering your employees small business health insurance since it’s proven to boost worker satisfaction and help recruiting efforts. In fact, surveys show that the number one benefit that employees are looking for in a job is group health insurance! Offering a small business health insurance plan is straightforward and more affordable than you might think. Plus, with a variety of plan options, you’ll be sure to find coverage that meets your employees needs and your budget.  

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How Small Business Health Insurance Works

There are 2 types of groups for small business health insurance, employer-employee groups and affinity groups. Employer-employee groups are self-explanatory: the insured members of the group all work for the same company or nonprofit group. An affinity group means that the insured are members of a group but not employed by the group. This could mean they are in the same professional association or members of a fraternal organization. 

 

Your company or group will have to buy small business health insurance plans for your members or staff; individuals cannot purchase these plans on their own. Before you make your decision about purchasing, you should be aware that at least 70% of the group or business must participate. 

 

When it comes to plans, they will look different for all groups in terms of rates and conditions, depending on insurer and plan type. With that said, it’s important to note that with small business health plans, employers and employees generally split the costs of monthly premiums. Once you choose the plan you want to offer, employees and members can choose to enroll or opt out of the group coverage. Some plans can be offered in tiers, meaning the members can choose between multiple coverage and price point options instead of being limited to just one option. You can also select plans that allow for coverage of members’ families and dependents, as well. 

 

Small business health insurance plans tend to be much more affordable for your employees because the risks are shared between a bigger group of people, and more people pay into the premiums. Larger groups make it simpler for insurance companies to pay out large claims, allowing them to offer coverage at lower rates.

The Benefits of Small Business Health Insurance

Small business health insurance has multiple benefits for both those who are covered by it, as well as the businesses and groups who offer it:

  • Small business health insurance is cheaper – You’re not required to offer group health insurance if you employ fewer than 50 people, but remember that your employees still need to get health insurance somewhere to keep them healthy. Their best option will be small business health insurance.  Even if they pay the majority of the cost of their insurance, group coverage has lower monthly premiums than individual plans, and generally lower deductibles than Marketplace coverage.
  • Tax benefits – In general, all health insurance-related costs incurred by an employer are fully deductible as regular business expenses under both state and federal tax laws. Additionally, if your small business has less than 25 full-time equivalent employees who make an average of $66,000 or less annually, you might qualify for a premium healthcare tax credit. Additionally, you must pay at least half of your employee’s premiums to qualify. Another tax incentive is  employees making pre-tax contributions toward the cost of health insurance. This means you would deduct the premium price from their paycheck prior to state and federal taxes being taken out. As a result, the employee’s take-home pay would increase, and their taxable income would decrease.
  • Employee recruitment and retention – There are a few reasons why offering group health insurance can lead to recruitment and retention of top talent. For one, healthcare is one of the most desired benefits, so if you offer it you’re more likely to attract the best employees. In addition, the tax benefits listed above act as an incentive for top talent to remain at your company. Since offering health insurance helps you recruit and retain employees, you’ll spend much less time and money on hiring and training new talent.

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Small Business Health Insurance Tax Credit

To expand on one of the benefits mentioned above, you may be eligible for a small business healthcare tax credit. Covering up to 50% (or 35% for non-profit organizations) of the premiums you pay for your employees.

 

Your credit amount is determined on a sliding scale, depending on the size of your business. A bigger healthcare tax credit is often available to smaller businesses. For instance, the highest tax credit would be available to a company with fewer than 10 employees with an average annual wage of under $27,000. Additionally, if your small business doesn’t owe taxes for your current year, you can carry the credit backward or forward to previous or future tax years.

 

Small businesses and nonprofit organizations can typically only qualify for the small business healthcare tax credit by signing up for a Small Business Health Options Program (SHOP) plan. All of the following requirements must be met in order to be eligible for a SHOP plan and the tax credit:

 

  1. You have less than 25 full-time or full-time equivalent (FTE) employees.
  2. Your employees’ average salary is $66,000 or less a year.
  3. You cover at least 50% of your full-time employees’ premiums.
  4. All of your full-time staff members have access to SHOP coverage. To be eligible for the tax credit, you are not required to offer coverage to dependents or employees who work fewer than 30 hours a week.

Overall, the healthcare tax credit could help small businesses in buying group health insurance at a lower cost, while still ensuring that their plan complies with ACA insurance standards. 

 

If you choose to offer your staff a small business health plan, and you meet the above requirements, you can apply for your tax credit using IRS Form 8941.

How Much Does Small Business Health Insurance Cost?

A variety of factors must be taken into consideration in the complicated process of calculating the price of small business health insurance:

Location

The cost of health insurance varies widely from place to place. Due to variations in the amount of insurers in your area, state and local regulations, as well as the local cost of living. This means that the price of group insurance can vary based on the state, county and even the city your business operates in.

Individual vs. Family Coverage

Insurance companies will most likely charge more for plans that cover spouses and children than they would for those that only cover employees. So your cost also depends on whether you’re buying a group plan that allows for dependents or not.

Plan Tier

You also have to decide which metal tier, or tiers, you’ll be offering your employees. There are four options: Bronze, Silver, Gold, and Platinum. The tiers indicate how the costs are shared. 

  • Bronze plans have the lowest monthly premiums but highest out-of-pocket costs. The plan will cover 60% of medical costs, and the employee will be responsible for the other 40%.
  • Silver plans have moderately priced premiums and moderate out-of-pocket expenses. The coverage is split 70% paid by the carrier and 30% paid by the employee.
  • Gold plans have higher premiums but much more affordable out-of-pocket expenses. The carrier covers 80% of the cost of medical care, and the employee pays just 20%.
  • Platinum plans have the most expensive premiums, but the lowest out-of-pocket expenses. Platinum plans cover 90% of covered medical services! That means the employee would only pay 10% of their bills. 

Taking all of these factors into account, the average annual health insurance premium for small businesses is $8,884 for individual coverage and $25,167 for family coverage. This figure is based on a 2024 Kaiser Family Foundation study of small businesses, defined as companies with less than 199 employees. Also, according to the study, employer contributions averaged 83% for individual coverage and 73% for family coverage, respectively.

 

If you’re worried about the costs of offering group health insurance but want to offer your employees something (and you have fewer than 50 full-time employees), you can instead choose to offer supplemental insurance.

 

For example, many employers choose to offer dental insurance, even though the Affordable Care Act does not require it. Fortunately, dental insurance is much more affordable to offer than health insurance. While the exact monthly cost of a dental plan will vary depending on the carrier and coverage level. Group dental insurance policies typically only cost companies between $8.94 and $13.90 per employee each month.

 

Offering your employees vision insurance can also be an affordable perk. This type of plan usually covers annual eye exams. Vision coverage can also sometimes provide limited coverage or reimbursement for the cost of eyeglasses. An average small business will pay $5 to $10 per month for each employee covered by vision insurance or up to $20 per employee per month for a more comprehensive package.

How to Save on Small Business Health Insurance

The decision to offer small business health insurance can feel overwhelming, especially if it will be an expense for your business. The good news is that there are ways to lower the price of group health insurance plans. 

Hire More Employees

The more employees you have, the lower your premiums can be. More people in an insurance pool means more people paying into the premiums, and less risk for insurance companies. 

Compare Insurers

Insurance plans all differ greatly, and each insurer offers different rates for all their small business health plans. That means you should compare both insurers and the plans they offer before choosing one. While doing this, it’s important to remember that the carrier that offers the lowest premiums isn’t always the best option. A low-cost health insurance company could have drawbacks. For instance, their plans might have very low premiums because they have a limited network of providers. 

 

Not sure where to start looking for the right insurer for you? EZ.Insure can help! Our agent will find the best fit for your business by comparing all of your options for you.

Offer a Health Reimbursement Arrangement (HRA)

You can offset the rising cost of healthcare by offering a Health Reimbursement Account (HRA). HRAs are employer-sponsored group health plans. Through which employees can receive tax-free reimbursement for qualified medical expenses up to a predetermined annual limit. Unused funds might be carried over to be used in the following years. These accounts are owned and funded by the employer.

 

The good thing about HRAs is that they don’t need to be pre-funded, unlike traditional group health insurance plans. That means you’ll be better able to manage your cash flow. Since you’ll be making payments from your business’s funds as each medical expense arises. Another benefit? All of the reimbursements are tax-deductible.

FAQs

How many employees do I need to offer small business health insurance?

It depends on the insurance company. Some companies only need 2 employees to qualify. Keep in mind the more employees you have the more expensive the group plan will be and you need to have a certain percentage of the company to participate in order to be valid.

Does small business health insurance also cover my employee’s families?

This depends on what plan you offer. Most plans can be extended to include spouses and children but you will pay extra for that benefit. Being able to cover their families with their group plan is a really attractive feature for most employees though so it can help you hire and keep good workers.

Do I still have to pay for health insurance once an employee leaves the company?

No, once your employee leaves or is fired their insurance is immediately ended. So, you won’t be left covering an employee that no longer works for you and they will have to find an individual plan or get covered through their new job.

 

Get Small Business Health Insurance Today!

To get free quotes, or more information about group health insurance plans, give EZ a call! Our agents can help you find the best plan for your company and save you hundreds of dollars a year. To get started, enter your ZIP code below, or call 844-770-0064 to contact one of our highly trained agents. We can help answer any of your questions and get you started today!

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Small business benefits, also commonly referred to as group benefits, give businesses a way to offer employees quality healthcare and long-term planning perks at an affordable cost. The term “small business” simply refers to EZ.Insure’s specialization in businesses with fewer than 50 employees, but don’t worry— even if your company has 50+ employees, we have access to insurance plans that meet the needs of any business size.

 

Whether you’re a new company looking to establish your first employer-sponsored health plan, or are simply aiming to enhance your team’s current benefits package, EZ.Insure makes the process quick, easy, and affordable. 

 

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Small Business Health Insurance

Small business health insurance provides essential health coverage to employees of a company. This type of insurance generally costs much less for employees as opposed to an individual plan, as insurance rates tend to go down when larger groups are insured together. These plans are highly customizable for small businesses as they can be tailored to meet a variety of specific needs and budgets. In addition to providing key health benefits to employees, studies show that employers who offer health insurance have an easier time attracting and retaining top industry talent. 

 

Want to learn more? Check out our full, in-depth Small Business Health Insurance Guide. 

Small Business Dental Insurance

Dental insurance is an insurance add on that covers all of your routine dental care such as cleanings, X-rays, fillings, and major procedures like crowns or root canals. The great thing about dental insurance is that many plans cover preventive dental care services at 100%, making it easy and affordable to keep your oral hygiene in tip-top shape. Dental insurance is typically purchased as an add-on to health insurance since the Affordable Care Act does not require healthcare plans to cover it. Even so, employers frequently offer both perks in aims to provide a more well-rounded benefits package that covers all of the bases. 

 

Want to learn more? Check out our full, in-depth Small Business Dental Insurance Guide.

 

Small Business Vision Insurance

Small business vision insurance, is an employee benefit that’s generally added-on to employer-sponsored health insurance and covers a variety of routine eye care services. These services include annual eye exams, prescription lenses, eye contacts, and sometimes even corrective eye procedures like LASIK surgery. Since poor vision is something that can significantly impact job performance and overall well-being, offering it to employees tends to increase overall job satisfaction and employee productivity. Additionally, it generally costs $15 or less per month per employee to offer vision insurance, making it an affordable and appealing complement to a typical health benefits package. 

 

Want to learn more? Check out our full, in-depth Small Business Vision Insurance Guide. 

Small Business Life Insurance

A small business life insurance policy is a necessity for anyone with loved ones who depend on them. This type of policy is commonly added on to employee benefits packages and works by providing an employee’s loved ones (beneficiaries) with funds in the case of an unexpected death. There are multiple types of life insurance policies all of which function slightly differently. These include:

 

  • Term Life Insurance: Provides coverage for a set number of years only, and pays out a death benefit if the employee passes away during that time.
  • Permanent Life Insurance: Includes “Whole Life Insurance” and “Universal Life Insurance” and “Final Expense Insurance,” all of which remain in effect for the entirety of your life, and never need to be renewed, as long as you pay your premiums. 

Employers can choose to fully cover the cost of employee life insurance, or offer it as a voluntary benefit where employees pay part or all of the premium cost. No matter how it’s set up, small business life insurance provides employees and their families with peace of mind, knowing that they’ll be financially stable in the case of an untimely death. 

 

Want to learn more? Check out our full, in-depth Small Business Life Insurance Guide. 

 

QSHERA (Qualified Small Employer Health Reimbursement Arrangement)

A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is a health benefit alternative to traditional health care, tailored to businesses with less than 50 full-time equivalent (FTE) employees. Rather than providing a standard group health insurance plan, companies offering QSEHRA can reimburse employees tax-free for their individual health insurance premiums and other qualified medical expenses.

 

QSEHRAs stands as a flexible, economical alternative to group health plans, allowing small businesses to offer employees important medical benefits without the complexity of traditional coverage.

 

Want to learn more? Check out our full, in-depth QSEHRA Guide.

ICHRA (Individual Coverage Health Reimbursement Arrangement)

An Individual Coverage Health Reimbursement Arrangement, commonly referred to as an ICHRA, is a benefit funded by employers that reimburses employees for health insurance premiums and qualified medical expenses. Unlike traditional health plans, where employees are limited to one or a few pre-selected coverage options, ICHRAs let workers choose the plan of their choice, and then receive tax-free reimbursements for the plan’s cost.

 

While Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs) exist only for businesses with less than 50 employees, ICHRAs can be offered to businesses of any size. All in all, ICHRAs serve as a great alternative to traditional group health insurance, as they provide more flexibility to employees, while helping employers manage costs efficiently.

 

Want to learn more? Check out our full, in-depth ICHRA Guide. 

 

Level-Funded Plans

A level-funded health plan is one type of employer-sponsored health insurance that offers business owners more flexibility and savings potential compared to traditional, fully-insured health plans. Level-funded plans are created by combining aspects of self-funded and fully-insured health insurance, helping small businesses manage high healthcare costs, while also providing employees with quality benefits. 

 

Unlike traditional health plans, with level-funded plans business owners incur some of the financial risks for claims. On the flip side, level-funded plans present the opportunity for refunds, if claims are lower than expected. Level-funded plans also commonly provide business owners with stop-loss insurance, which helps to pay for claims that are higher than anticipated. 

 

Want to learn more? Check out our full, in-depth Level-Funded Health Plans Guide.

Self-Funded Plans

A self-funded health plan, also known as a self-insured health plan, is a type of employer-sponsored insurance where business owners incur the financial risk of employee health claims. Instead of paying a monthly premium to health insurance companies, with self-funded plans, employers set aside their own money to cover employee medical expenses as they arise.

 

Unlike level-funded and fully-insured plans which have fixed monthly payments or premiums, with self-funded plans employees only pay for actual employee claims that occur. This presents the opportunity to save funds that are unused at the end of the year, but also could mean paying more out-of-pocket, if claims are higher than expected. Stop-loss insurance is also commonly paired with self-funded plans to help keep out-of-pocket costs in check if claims are higher than expected. 

 

Want to learn more? Check out our full, in-depth Self-Funded Plans Guide.

 

Fully-Insured Plans 

A fully-insured health plan is a traditional employer–sponsored insurance plan, where businesses pay a set monthly premium to an insurance provider who takes full responsibility for all employee medical claims. Fully-insured plans decrease the amount of risk that employers take on, since the insurance company covers all claim payouts, no matter how many total claims are filed. 

 

Fully-insured plans are a great option for small businesses as they offer stability, since monthly premium costs always remain the same. Additionally, they are generally easy to manage and comply with all Affordable Care Act (ACA) regulations, making them a great choice for companies seeking predictable prices, and minimal administrative work. 

 

Want to learn more? Check out our full, in-depth Fully-Insured Health Plans Guide.

 

Get Small Business Benefits Today with EZ.Insure!

EZ.Insure has all the tools you need to get a small business health insurance plan, or other employee wellness benefits. No matter what your budget and preferences are, we can find a plan that works for you. Our platform offers free, no-obligation quotes, side-by-side plan comparisons and 24/7 access to licensed insurance agents. To get started, simply enter your ZIP code below or give us a call at (844)-770-0064.

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If you have more specific questions regarding any of our small business benefits, be sure to check out our Small Business Benefits FAQs section!

How Your Group Health Premiums Are Calculated

How Your Group Health Premiums Are Calculated text overlaying image of a ben and calculator on a white table In 2023, group health plans for one person cost an average of $7,739 and plans for a family cost an average of $22,463. Those numbers are expected to have up to a 7% increase in 2024. However, there are ways to lower how much you pay for health insurance. It all depends on how your premiums are calculated. If you know what factors affect your bottom line, you can take steps to lower your total premium.

 

For group health insurance, premiums are calculated for each worker who signs up for the plan, plus the costs of adding a spouse or children. The total price for the group plan is calculated by adding all of the individual premiums up. Most companies have their employees pay a portion of their plan cost. Then the company takes those payments and then pays the rest of the cost to the insurance company every month.

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How Group Health Insurance Works

Since the risk is spread out among more people. The cost of group health insurance is generally much lower than the cost of individual plans. Once the company decides on a plan, employees can choose whether or not to sign up for coverage. However, group health plans usually need at least 70% of a company’s employees to partake, in order to be effective. Companies usually offer different levels of plans so that enrollees can choose between basic coverage or more advanced coverage with add-ons. Depending on the plan, the premiums are then split between the company and its employees. Businesses can offer further protection by allowing their employees to add their spouse or children to the plan. Although doing this typically means the plan becomes more expensive.

The Factors

Since every business is different, your premium could be higher or lower based on a number of factors that are used to figure out how much your plan will cost. It also depends heavily on the group being insured.

 

  • Fully insured with less than 50 employees – Premiums are based on how many people in your area, not just from your business, are signed up for the same plan with the same insurance company. The cost of the insurance is also based on how old the enrollees are. So, everyone the same age with the same insurance plan from the same company will pay the same price. The rates go up every year based on their age. Some of the annual renewal increase at your company will come from the fact that your workers are getting older.
  • Fully insured with more than 50 employees – Premiums are calculated based on the age, gender, location (zip code), and medical conditions (expected healthcare costs) of your workers and their dependents who are covered by the plan. 
  • More than 100 employees – Groups with more than 100 workers are counted the same way as businesses with more than 50 workers. Rates are based on the age, gender, location (zip code). And medical conditions (expected healthcare costs) of your insured workers and their dependents.

Other factors are included in calculating your premiums such as:

Size of The Group

How much you pay can depend on how many people are on your group plan. This number includes both your employees who choose to join your plan and their family members who join through an employee. By spreading the health risks of a few people over a larger group, a bigger group can help you pay less for your insurance.

Health of The Group

Your rate is affected by how healthy the group as a whole is. Even though the Affordable Care Act says that insurers can’t change premiums or refuse coverage based on a person’s pre-existing conditions or general health. The American Academy of Actuaries says that the health of the group as a whole can play a role in figuring out premiums. If a risk group has a lot of people with higher expected claims, the average premiums will be higher. This can be good for your business, as the Academy also says that premiums will be lower if a risk group avoids people who are likely to make more claims. Or if it can cover the costs of people who are likely to make more claims by signing up a lot of people with lower costs.

Average Age

The Affordable Care Act (ACA) says that insurers can’t change rates based on things like gender, but they can still take age into account. Rating by age is still legal as long as the ratio of the most expensive adult age band to the least expensive adult age band doesn’t go above 3:1. This means that in a group plan, the average age of your group can affect how much you pay.

Claims History

Going to the doctor often can add up. Insurance companies make changes to your prices over time based on how many claims have been made and how much they cost. When it’s time to renew your insurance, an insurer will look at how often your group has filed claims and make changes based on that. If a few of your employees had health problems that required them to go to the doctor often or spend a lot of money. That may be represented in your updated premium cost.

Tobacco Use

The Affordable Care Act (ACA) says that group health plans can charge people who smoke up to 50% more for their health insurance rates than people who don’t smoke. This is called a “tobacco surcharge.”

Industry

Different jobs have different amounts of danger. Your insurance company may change your rates based on what your workers do for a living. For example, office workers don’t face the same health risks as people who work in factories, buildings, or offshore. So their insurance premiums may be lower than those of people in other jobs.

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Coverage Amount

Group health plans are not all the same. How much you and your workers pay will depend a lot on how much coverage you get. When you have better coverage and lower out-of-pocket costs, your premiums may go up. Due to the extra covering, adding on extras like dental and vision plans can also raise your premiums.

Can My Employees Be Denied?

A person with a medical problem can’t be kicked out of a group health plan. The health insurance must either cover everyone in the group or not cover anyone. They can’t choose one or more people. A fully-funded health insurance plan cannot be turned down by a company with less than 50 workers. Carrier participation rates are based on a ratio of the number of employees who are insured to the total number of employees who are qualified. This number is different for each insurance company, so you should talk to your health insurance agent about it.

Saving on Group Health Premiums

For a small business owner, health insurance rates can be expensive, but you don’t have to accept what your company is being charged. You might be able to use certain strategies to lower your costs and make your workers healthier.

Start a Wellness Program

Since the number of claims has a direct effect on your premiums. It can pay to make sure that all of your workers are in good health. Through health education and wellness practices, a customized workplace wellness program can help people choose to live healthier lives. This can lead to a healthier, more active workforce. And lower overall rates by reducing the number of doctor visits caused by diseases that could have been prevented. It can also help attract and keep good employees because they know their employer cares about their health and safety. 

Telemedicine Access 

Giving your workers access to a mobile doctor 24/7 is another way to cut down on the number of trips to the doctor. With telemedicine services, your employees can talk to a real doctor by phone, video chat, or online chat. This lets them get the answers they need without making an in-person visit with the doctor. This means they don’t have to pay a copay and your plan doesn’t have to pay for an extra claim.

Economy Scale

Depending on where you get your insurance, you might be able to use the “economy of scale” to your advantage. Larger businesses have more workers and more buying power. But smaller businesses don’t have as many employees to save money through economy of scale.

How To Enroll

There are countless group health plan providers and plans to choose from so choosing can be difficult. But we’re here to help! You can call EZ for a personal agent to help you sort through your plan options, get free quotes, or to simply find out more about group health insurance plans. Our experts can help you save hundreds of dollars a year by finding the best plan for your business. You can reach one of our highly trained agents at 877-670-3531, or enter your zip code in the box below for free instant quotes.

Compare Group Health Insurance Plans

The Complete Guide to Open Enrollment for Employers

It’s here! Open Enrollment for your group health insurance plan has come around again, running from November 1 – December 15. Now is the time when you can choose new benefits, or review and change existing health insurance benefits for your employees, and we get it: this time of year can be hectic and stressful, with all of the questions that employees (and you!) might have. Not only that, but you’ve got the weight on your shoulders of knowing that this is your one chance to get this done until next year! But don’t worry, we’ve got you – first, check out our tips below for a smooth Open Enrollment, and then speak to an EZ agent who can help you find the perfect plan for you and your employees. 

employees sitting at desks in an office
To qualify for group health insurance, your business must have at least 1 full time employee other than yourself or your spouse.

Does Your Small Business Qualify for Group Health Insurance?

Let’s start with the basics. If you’re new to offering group health insurance to your employees, you might be wondering how you qualify to offer it. Well, it’s actually pretty simple, and more likely than not, your business will qualify! You need to:

  • Have at least one full-time employee who is not the business owner, or the spouse of the business owner
  • Be legally registered as a business entity in your state (regulation for this varies from state to state)
  • Contribute at least 50% to your employees’ monthly premiums

Why Take Advantage of Open Enrollment?

Ok, so your business qualifies to offer group health insurance, but should you? And if you’ve already got a plan in place, why review it during Open Enrollment? Well, there are a few very good reasons to do both:

  • You and your employees can save money – Enrolling in a group health insurance plan is often cheaper than enrolling in an individual plan. Not only that, but the more employees you can get to sign up, the cheaper the plan could be.
  • Changes in life circumstances mean changes in insurance needs – If you do already offer group health, you definitely need to take advantage of Open Enrollment and use this time to reassess your and your employees’ needs. Has anything major changed, like births, deaths, or marriages? If so, you might be able to find a plan that offers better or more tailored coverage for a better price.
  • Group health can mean tax advantages – Who doesn’t love to save on their taxes? Take this time to look into ways you could be saving, like checking if you qualify for the small business health care tax credit, or by choosing to offer tax-advantaged healthcare options, like HSAs, FSAs, or HRAs. 

What Should You Be Thinking About When Choosing a Plan?

Another important basic step in the process: knowing what you should be thinking about when exploring your options. Here are 4 essential factors that should go into your decision-making process:woman in a blue button up shirt with her hand on her chin and question marks around her

  • Costs associated with the plan – You’ll want to consider how much employees want to pay in premiums, while also remembering that you have to contribute at least 50% of the amount each month. Also keep in mind things like deductibles, copays, and coinsurance that can all add up, depending on how often your employees access medical services. 
  • The metal tiers of available plans – Familiarize yourself with the so-called metal tiers of plans: Platinum, Gold, Silver, and Bronze. These terms have nothing to do with quality of care, rather they indicate what percentage of costs a plan will pay for covered benefits. For example, popular Silver plans will usually cover around 70% of costs, with the insured paying the remaining 30%. 
  • The type of plan you want – In addition to choosing a metal tier, you’ll also have to consider what type of plan you want to offer to your employees. For example, you can choose from HMO, PPO, POS, and EPO plans; each of these types of plan will offer different price points, since some are more flexible about things like network coverage.
  • Insurance companies – Check out which insurance companies offer plans in your area, and what their networks look like; you want to be sure that they offer affordable care in locations that are convenient for your employees.

What Should Employees Consider?

So you know what you need to be thinking about, but are you ready to answer your employees’ questions, or take on their concerns? You can help guide them in choosing or changing their plan by telling them to take the following factors into consideration:

  • The price of the plan – Let your employees know exactly how much the plan will cost them per paycheck.
  • Their dependents – Your employees should think about who they will need to have covered by their plan, especially if they plan on adding on family members in the coming year, or if they have added any new household members since last year. You’ll also need to make clear your policy on contributing to dependent coverage.person with a megaphone and exclamation points coming out of it
  • Any changes in coverage – Make sure your employees know what is covered under the plan, especially if there is anything new being added, like dental or vision coverage. 
  • Any added benefits – In addition, if your plan is going to have any new benefits, like telemedicine or wellness programs, let your employees know.

Top Tips for Employers

Group health insurance can seem a bit overwhelming, especially since studies show that 35% of employees have little to no understanding of their healthcare coverage! Not only that, but  22% of employees are confused during open enrollment, 20% are anxious, and 21% are stressed, so it can be tough to know how to approach this subject. But there are some ways to make the process go a little more smoothly. For example, you can:

  • Go digital – You don’t have to print out reams of paper, or have endless meetings with employees about benefits (which might be tough with all of the work-from-home going on right now)! Save paper, toner, and your and your employees’ sanity by offering everything in PDF form, and by considering holding a virtual benefits fair, which employees will be able to access when it works for them from the comfort of their home. 
  • Keep it simple – When emailing employees about their benefits, be as concise as possible, with price per paycheck and benefits clearly laid out, using language that is easy to understand. You can also include any FAQ sheets you get from your insurer or agent, as well as a glossary of terms and acronyms. 
  • Send out a survey – While you do have to be careful about privacy when it comes to employees’ health, there is no reason why you can’t send out an anonymous survey to find out what your employees are most interested in when it comes to their insurance plan, so you can either make a choice to change the plan you’re offering, or can recommend the right plan to them.
  • Be creative with your communication – Email is great, but you have tons of options when it comes to follow-up communication and reminders about enrollment, including:person sitting at a table with their cell phone in their hands
    • Text messages
    • Posters
    • A dedicated intranet webpage
    • Videos on screens in common spaces
    • Notices on paychecks (both hard checks and online)
    • A chat channel, through a platform like Slack
    • A Twitter chat, complete with hashtags that other employees can search

Yes, it’s Open Enrollment time again, what some might consider the most confusing time of the year. But you know? You got this, and we’ve got your back if you need help choosing, reviewing, or changing your employees’ healthcare plan. Come to EZ.Insure for a dedicated agent who can answer all of your questions, every step of the way, as well as find you fast, accurate quotes and sign you up for a great plan – all for free! No hassle, no obligation. To get started with us today, simply enter your zip code in the bar above or to speak to an agent, call 888-350-1890.

The Pros & Cons of ICHRAs

Individual Coverage Health Reimbursement Arrangements, or ICHRAs, have been available since January 2020, and have been growing in popularity over the past year. This is because they allow employers to save money while offering employees a way to get healthcare benefits. They are a great alternative to group health insurance, especially since the rules surrounding them are less restrictive than those surrounding traditional healthcare plans, or even those of other HRAs. For example, there are no contribution maximums and no company size restrictions on ICHRAs. Before deciding if an ICHRA is right for you, you should first weigh the pros and cons.

ICHRA Pros

tax free written on a blackboard in white and yellow
All reimbursements for each employee are tax-free.

ICHRAs are a type of health reimbursement arrangement, a health benefit that differs from an HSA in that it is an arrangement, as opposed to an account. Employees don’t put money aside for their healthcare expenses; rather, you reimburse them for their medical expenses. You provide a set monthly allowance for employees’ premiums and medical expenses. ICHRAs have a lot of advantages for both you and your employees, including: 

  • You can choose how much you want to contribute every month, and there is no minimum or maximum. Once set, you will give that amount to employees monthly; they cannot exceed that amount, which will help you budget accordingly.
  • Reimbursements are tax-free.
  • You can offer different monthly allowances to different groups of employees based on the type of job they do, how many hours they work, and even family status.
  • Employees use the money you offer them to find an individual healthcare plan that suits their needs. This is empowering to them, and will allow you to focus on your business instead of trying to find a group health insurance plan that fits all of your employees’ needs. 
  • Employees need to have an individual insurance policy to participate in an ICHRA, so if you enroll and start reimbursing employees mid-year, employees will become eligible for a Special Enrollment Period to choose a major medical health insurance plan. This means that they will not have to wait until the Open Enrollment Period, November 1- December 15, to buy a health insurance plan.

ICHRA Cons

There are many positives to offering an ICHRA, but sometimes with the good comes some bad. The disadvantages of ICHRAs include:

red warning sign
Employees who are on their spouse’s health insurance plan cannot participate.

  • This type of arrangement prevents employees from being eligible for advanced premium tax credits on ACA Marketplace plans. So if an employee decides not to take part in an ICHRA that is considered “affordable,” they will not be able to receive tax credits with an ACA plan. 
  • Employees who are on their spouse’s health insurance plan cannot participate. The only way to participate is if they purchase their own individual health insurance and get reimbursed for it through the HRA. 

Need Help?

For many employers, ICHRA pros outweigh the cons and can seem like a no brainer, which is why they are growing in popularity. You get to help your employees purchase health insurance plans that meet their specific needs, and you also get to save money in the process. Reimbursements are tax-free for both employees and employers, meaning that they are tax-deductible for employers, and income tax-free for employees, which will save you on employer payroll taxes. It’s a win-win situation.

If you are interested in an ICHRA, or want to explore your options for a group health insurance plan, reach out to an EZ agent in your area. Our agents are highly trained and work with the top-rated insurance companies in the country. We can assess your needs and compare plans instantly, for free. To get started simply enter your zip code in the bar above, or to speak directly with a local licensed agent, call 888-998-2027.

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