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A Small Business Guide to Group Health Insurance

June 7, 2021, by New City Insurance

doctor handshaking with a couple at the hospital who has Group Health InsuranceAccording to a Kaiser Family Foundation study, approximately 50 percent of businesses with between three and nine employees offer health insurance benefits to their employees.

This ratio increases to 71 percent for businesses with between 10 and 24 employees, 85 percent for businesses with 25 to 49 employees, and 99 percent for businesses with 200 or more employees.

Group health insurance is an incredible recruiting tool that can help attract and retain top talent. It can also save businesses and their employees money and present tax incentives to companies that qualify for tax credits. Healthy employees tend to be happier, resulting in a positive work environment and higher morale. Offering these benefits often makes employees feel valued and appreciated.

The benefits of group health insurance for small businesses may be undeniable, but it can still be challenging to navigate policies without guidance. Learn more about group health insurance for small businesses and what types of policies are available for employees.

How Group Health Insurance Works

Before purchasing a group health insurance policy, it is important to fully understand what options are available and the requirements for each plan. Most group health insurance policies have a minimum participation rate in place, usually around 70 percent.

The cost of group health insurance is shared by all participants, including the employer and employees. All parties can enjoy lower insurance rates as the risk is lower when more people are signed up under a policy. Employers can choose to pay for the bulk of their employees’ health insurance or put most or all the cost of insurance onto their employees.

Once a business chooses a group health insurance plan, employees can either accept or decline coverage. Employees may also have the option to take basic coverage or pay extra for add-ons, such as dental or vision. Health insurance benefits are often extended to immediate family members at an additional cost, such as spouses, children and dependents.

To be eligible for a small business group health insurance plan, the business must be considered a “small business” in the insurance company’s eyes.

How It Related To Small Businesses

Small employers are generally defined as having two to 50 employees. Businesses with more than 50 employees are not generally considered “small.” In certain states, like California, Colorado, and New York, 2 to 100 employees is considered a small group.

Group Health Insurance Concept

Under a group health insurance plan, employees are usually responsible for paying a portion of their health insurance premiums.

The employer then pays a portion of health insurance premiums on behalf of the employees. Paying a larger portion of employee premiums is a great way to show workers that they are appreciated and valued.

Small Business Health Insurance Requirements

Most small businesses offer benefit plans voluntarily as a way to recruit new talent and retain loyal employees. However, there are some legalities surrounding group health insurance in the business world.

No law directly requires employers to offer health care coverage to employees. However, the Affordable Care Act (ADA) does impose hefty penalties for businesses that do not comply with their recommendations.

Under the ACA, employers with 50 or more full-time employees or part-time equivalency must provide health insurance to at least 95 percent of their full-time staff or face a penalty by the Internal Revenue Service (IRS).

Health insurance policies must meet certain requirements to comply with the ACA on coverage and affordability. Employers are also required to extend coverage to the dependents of employees, which typically include spouses and any biological or adopted children under age 26.

There are also other circumstances in which a small business may be required to offer group health insurance to employees, such as if an employment contract has this provision written or if an oral agreement was made.
Employers can also not offer health insurance in a discriminatory manner.

This means that a business cannot refuse to offer an employee health insurance based on color, race, gender, age, national origin, religion, pregnancy or genetic information.

Speak With An Insurance Expert Today

businessman hand holding plus sign virtual means to offer positive thing about Group Health Insurance

Today, businesses have access to a wide range of health insurance types, from preferred provider organizations (PPOs) and health maintenance organizations (HMOs) to HSA-qualified plans and indemnity plans.

It is important to become familiar with each type of health insurance to determine which is best suited for employees while also falling within the company’s budget.

Consider scheduling a consultation with an insurance expert to determine what type of group health insurance is the most cost-effective and appropriate option for the company.

For more information about insurance for small businesses or to speak with an insurance professional, contact the knowledgeable team at New City Insurance.

Have Additional Questions?
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Filed Under: Group Health Insurance,  Insurance

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New City Insurance
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Carol Zhang
Carol Zhang
04:29 06 Mar 22
As a rapidly expanding national media organization, the employee benefits strategy and administration that New City has provided us during our growth has been invaluable. They have been proactive about informing us of the different benefit strategies available to us as we grow as well as managing the additional compliance laws and reporting requirements at each stage of our growth.
Claudia Villalobos
Claudia Villalobos
20:14 03 Mar 22
New City Insurance made navigating through all the health insurances super EASY. Their documents are highly informative, professional, and easy to work with. Thank you for making the process of choosing a health plan so simple. You guys are THE BEST!
Philippe Salas
Philippe Salas
17:02 22 Feb 22
I never expected to have a good time talking to an insurance salesman, but let me tell you Brendan was quite the treat. He was very helpful explaining the options and has a wonderful sense of humor. I hope to speak with him every time I call.
Jennifer Polito
Jennifer Polito
17:15 09 Feb 22
Super easy enrollment process. Fast and friendly customer service. If you are looking for an insurance company that is there for you every step of the way I highly recommend New City Insurance.
Rocky Salas
Rocky Salas
23:46 07 Jan 22
So friendly, I hope to speak to him again in all my future insurance needs.
Rocky Salas
Rocky Salas
23:38 07 Jan 22
So friendly and soft spoken. I hope to speak to him again in all my future insurance needs.
Jose Brena
Jose Brena
13:20 06 Jan 22
Eric Calciano has been extremely helpful in finding and selecting the right insurance coverage for our company. With many options out there Eric assisted us on getting a low cost provider saving more than 20% than from our competitors and providing excellent coverage for our employees.
Anastasia Beaverhousen
Anastasia Beaverhousen
17:05 28 Dec 21
Signing up for insurance was quick and easy. Felicity Sundsboe
SFCC
SFCC
22:08 29 Nov 21
Jeff Stoltey and his team provide excellent customer service. Jeff has always provided my company SFCC with straightforward options. I went to a larger insurance company only to RUN BACK to Jeff at New City Insurance. I recommend them to anyone needing insurance without hesitation.
Kevin Luby
Kevin Luby
19:13 22 Oct 21
Quick, easy & informative. We were able to secure quality insurance for our small business on a tight deadline. Thanks for the help New City.
Theresa Ruybol
Theresa Ruybol
19:30 01 Jul 21
Eric was so great with us. He was very patient and kind as we are a newer smaller organization who is growing rapidly. With that said, we had made our inquiry, he had great rapid response and mostly had to wait on me. Any request that we made and/or questions we had, he was great answering and helping us understand. Then when we were ready for all documents and to move forward, Brendan helped with getting that together and the two of them worked their magic on New City's end to notify me of what was needed, assist me in that process and confirming that all was complete and approved for the coverage. I just want to say thank you all again so much, as insurance has always been confusing to me, and you all made that process go a lot smoother.Thank you
Andrea Ordendorff
Andrea Ordendorff
21:06 07 May 21
I've been working with both Clayton and Brendan for well over a year. As the purchase of our dental practice was delayed well over 14 months they both patiently supported me and continued to make themselves available. When we were officially ready to sign up they made the whole process seamless and super easy. This team is highly knowledgeable, professional, supportive, and efficient! I can't thank them enough for everything they've done.
T W
T W
22:32 30 Aug 20
I love New City Insurance. I never had a good experience dealing with insurance brokers until I started working with Brendan. He’s awesome! He is patient with me and takes the time to answer all my questions. I’m very grateful for all his help and hard work!
Mary Jane Deyette
Mary Jane Deyette
00:57 11 May 20
Jeff Stoltey is so awesome...even thru my company had only two employees, he took the time each year to research and find the best plan for us. The only reason I am leaving New City Insurance is because we no longer have any employees. Thank you Jeff
Alma Ortiz
Alma Ortiz
22:25 23 Feb 20
Brendan was awesome! I couldn't figure out how to pick my plan and he returned my call on a weekend to help me. Outstansing service!
jessica kavanagh
jessica kavanagh
19:53 13 Feb 20
Brendan was so helpful I definitely recommend him if you’re in need of good help and getting it done promptly. Thankyou so much again.
Tricia DeYoung
Tricia DeYoung
19:49 13 Feb 20
I was very thankful I inquired about this info. with Brendan. He was very helpful so I understand the benefits available much better now. Thank you Brendan.
B Bayer
B Bayer
17:43 24 Sep 19
NCI handled almost everything from start to finish. Clayton and Brendan made the plans easy to understand and walked me through the application process. They got me my ID numbers before my cards arrived so that I could keep an appointment I had already scheduled. My last broker wouldn't have done that. 5 stars!
Jessica Lehr
Jessica Lehr
03:36 07 Jun 19
Our staff was interested in a health plan, but we didn't know how beneficial a solid employee benefits package would be for our business to expand. We'd lose prospective employees because they had more options for their medical insurance which was sometimes more valuable than more pay. The New City team was amazing and gave us as many affordable options as possible so that everyone had their needs met.
Mike McClay
Mike McClay
19:36 03 May 19
My employer uses New City as their insurance broker, and I'm always amazed when I call in for assistance by how knowledgeable and attentive their staff is with my requests. Their online benefits platform makes selecting insurance plans pretty darn easy. I would highly recommend their services.
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