Employees are often attracted to companies who offer a good package of benefits. This is often seen as a sign that the business is prosperous and takes care of their employees well. Most of the time, first-class potential employees are looking to see if you have group health insurance, otherwise they may be looking somewhere else.

What is Group health insurance?

It is an insurance policy that involves health coverage for a group of individuals. Instead of having an individual policy, many choose to enroll in their group plan. Group health insurance is the only way for employees to be covered e.g. for maternity immediately, unless they already have an individual health insurance policy in force for at least 6 months or an year and have already requested coverage. For your business to qualify for Group health coverage, most states require that you have at least two eligible (min. 75% partcipation of eligible employees) employees.

Why should an employee move to the group health insurance plan offered at work during an open enrollment?

Open enrollment is referred to as the time you can sign up for health coverage without being denied coverage. Maybe you can no longer afford the premium for your current plan. You now realize that premiums for group health insurance come out of your check pre-tax, thus lowering your taxable income. Also your spouse may have recently lost their job, and you now have no coverage, a medical emergency could be detrimental to your financial checkbook.

Why do employers need to consider Group health insurance?

Small business health insurance has lots of benefits. Besides providing medical care for yourself and your employees, a small business health insurance plan helps spread the financial risk between all the members.

But group health insurance has tax advantages . Employer contributions to a small business health insurance plan are generally 100% tax deductible, and employees save on payroll taxes.

How group health insurance works?

A small business health insurance plan provides its members with a set coverage with rates calculated using the group and individuals. Employees may be able to add policy riders and additional coverage to fit their specific needs, but the basic policy format will remain the same.

Likewise, although small business health insurance comes in a variety of shapes and sizes (fee-for-service, HMO, PPO, POS), the format that's chosen will apply to all members. (And although it is technically possible to purchase a group indemnity policy, the managed care plans are much more common.)

Although rate calculations vary both from state to state and from company to company, the cost of a group health insurance plan is based on the characteristics of each member, including:

• age
• health status
• occupational hazard
• business and/or residential location

Employees of a business that offers group health insurance are not compelled to join the plan, but the group must maintain a minimum number of insured (as few as 2 people, depending on the policy) to guarantee coverage.

What is the cost of small business health insurance?

So what about the bottom line? Well, group health insurance can be less expensive than a bunch of individual policies bound together, but it's not cheap. No health care in America is.

Depending (again) on the state and the insurer, you, as the employer, will be required to pay some percentage of an employee's individual premium . If the employee wants to extend coverage to a spouse or dependant, you may choose to pay a percentage of that cost, but that's not required. You'll probably have a lot of policy and payment options to choose from. Getting right to that . . .