Starting a Group Health Plan: A Guide for Small Businesses

Allison Hutton

Starting a Group Health Plan: A Guide for Small Businesses

As a small business owner, you may not have much experience with group health plan options in your workplace. As your business grows, though, you may find that group plans are most beneficial to your employees and your company. While IRS.gov explained that the transition to 25 or more employees cancels eligibility for the health care tax credit, there are many benefits in transitioning to a group health option.

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Transitioning Between Individual and Group Health Plans

Group health plans are offered by an employer to employees for the duration of their employment. Most often, employers pay a portion of the total cost of employee monthly premiums while employees pay a portion from each paycheck. Unlike individual plans, employees don’t have to worry about paying a monthly bill and all participants have the administrative tasks taken care of for them.

Another benefit to employees transitioning to group health plans from individual plans is that their risks are calculated differently. In other words, if some full-time employees are eligible, all are eligible. Unlike individual plans, which often leverage questionnaires and medical histories to calculate premiums, group coverage offers all employees the same coverage at the same cost. HealthCoverageGuide.org noted that no employee can be denied coverage based on past medical issues under group plans.

Benefits of Offering Group Health Coverage to Employees

While individual plans can be customized to fit the needs and budget of employees, group plans can bring about many benefits for both employer and employee.

Tax Benefits for Your Business

HealthCoverageGuide.org explained that as an employer offering group insurance to employees, most premium contributions for employees and their dependents are completely deductible as business expenses, regardless of business type.

Improved Employee Recruitment and Retention

Offering health coverage to employees is a great way to attract and retain quality employees. Oftentimes, employees will accept a lower salary in exchange for a robust benefits package that offers health insurance. Offering employer-sponsored insurance to your employees shows that you care about their well-being and are committed to offering quality benefits to highly qualified employees.

A Healthier Workforce

If employees aren’t burdened with the high costs associated with individual health coverage, they’re more likely to seek out preventative care. In turn, your workforce will be healthier overall, especially if coupled with a company-sponsored wellness program.

By understanding the short- and long-term benefits associated with offering group health insurance to your employees, you’ll be more prepared to explore available options and make the best decision for your small business and your workforce.

Allison Hutton is an experienced writer, editor, communications professional, researcher and social media consultant. During her more than 15 years of communications and writing experience, Allison has worked with a variety of clients, from small-business owners to Fortune 500 companies. She has an M.S. in entertainment business, a B.A. in communication and lives in Pittsburgh, Pennsylvania, with her husband and four children.