Group Health Insurance
Last Updated: April 12, 2017
What Is Group Health Insurance Coverage?
This type of insurance policy is a single contract that covers all members of a defined group, such as the employees of a company. Coverage often extends to the employees' spouses, as well as any dependents (through age 26).
What Constitutes a Group for Health Insurance?
For the purposes of health insurance, a "group" consists of at least two people. New York State used to permit sole proprietors to obtain group coverage by defining them as a "group of one," but under the Affordable Care Act (ACA), that's no longer the case. Self-employed Americans are now required to purchase individual health insurance plans. The only way around this is to form a partnership of at least two people. The business need not have employees, but if there are two owners, or partners, then they would qualify as a group.
What Employees Are Eligible for Group Health Insurance?
Employee eligibility requirements in group insurance pertain to employment status, not health status. In general, full-time employees (defined as employees who work at least 30 hours per week) are eligible for group health coverage, and they cannot be denied based on their medical histories. Part-time employees can also be covered if their employers so choose.
Non-employee directors, independent contractors, retirees, seasonal employees, and temps are not eligible. Retirees can use Medicare and Medigap for their health coverage, while the others would need to find individual health insurance plans.
How Does Group Insurance Differ from Individual Insurance?
Individual insurance applies to both individuals and families. Unfortunately, families don't count as groups, so they cannot get the benefits associated with group coverage, such as lower premiums and tax efficiency. Furthermore, people who have individual insurance must pay 100% of their premiums, while those who receive medical coverage via employment benefits are required to pay only a fraction of the total monthly premiums.
Purchasing individual insurance can be a daunting task because one must research health plans on his or her own and shop around for the best coverage at the most affordable price, whereas with group insurance, all of the legwork is done by the employer's insurance broker. Of course, individuals can use a broker, too, but they may end up devoting just as much time to shopping for a broker as they would to shopping for insurance.
Group Health Insurance Plans
The federally-mandated plans are organized into four tiers: Bronze, Silver, Gold, and Platinum. All plans offer the same coverage and differ only according to the insurer's payable percentage of the average overall cost of providing essential health benefits to the group's members. For example, the insurance company will cover 60% of the cost for benefits covered by the Bronze plan, and the employee will pay the remaining 40%. Insurers will pay 70%, 80%, and up to 90% of the benefits offered by the Silver, Gold, and Platinum plans, respectively. In terms of coverage, the "essential health benefits" include preventive and wellness services, emergency services, prescription drugs, and more.
How Much Does Group Health Insurance Cost?
According to the Kaiser Family Foundation's Employer Health Benefits Survey, the average cost of health insurance per employee in 2016 was "$6,435 for single coverage and $18,142 for family coverage. The average family premium rose 3% over the 2015 average premium while the increase in the premium for single coverage was not statistically significant." These figures are national averages and include both the employer and employee contributions. They may or may not reflect the actual costs to your company or employees because the premiums are calculated based on multiple factors:
- Employee demographics
- Number of employees
- Employment status (full-time, part-time)
- Network of providers
- Plan structure and coverage
- Insurance carrier
Despite rising health care costs, the New York City Business Group can still find opportunities to save you money on group medical coverage. Did you know that insurance companies have introduced new prescription riders that can save your employees 15-25% on their medications? Or that you can realize a substantial reduction in your monthly premiums by switching from a Preferred Provider Organization (PPO) to an Exclusive Provider Organization (EPO)? Give us a call at 718-554-3425 and ask for more ways to save on group health plans.
Are Group Health Insurance Premiums Tax Deductible?
Business expenses incurred in the pursuit of profit are generally tax deductible, and that includes group health insurance premiums paid by an employer. Employees, however, cannot deduct their portions of the premiums because the employer pays the premiums with pre-tax dollars, meaning that they are not subject to income tax withholding. Therefore, claiming a deduction for medical coverage when an employee files his or her tax return would be considered "double-dipping." On the other hand, in cases where the employer includes the benefits in Box 1 (Gross Wages) on the employees' W-2 forms, the IRS will allow the premiums to be deducted.
Do I Have to Offer Health Insurance to All Employees?
Historically, many employers have offered health care plans as part of their employee benefits packages to attract and retain talent, but the "employer mandate" of the ACA has turned this choice into a legal obligation, depending on the number of employees and whether or not they work full-time. Companies with fewer than 50 full-time equivalent (FTE) employees may continue to offer medical coverage at their discretion, but larger organizations must comply with the ACA or face monetary penalties of $2,000 to $3,000 per FTE employee. Although the penalties don't apply to the first 30 of 50 or more employees, the cost of noncompliance could exceed the cost of providing these benefits.
Keep in mind that you're not limited to offering one plan. Purchasing a combination of plans may result in lower premiums overall. Alternatively, you could offer a basic plan that would allow you to stay on the right side of the law, and then you could let your employees pay extra for the services that they want. This may prove to be a better approach for them as well, since different employees will have different needs and budgets.
How to Save Money on Group Health Insurance
Health coverage premiums usually increase over time, but that doesn't mean that it's not possible to save money. There are several ways to do so:
1) Take advantage of the new prescription riders that offer a 15-25% discount on medications.
2) Provide the minimum coverage required by law, and then allow employees to supplement their coverage according to their personal needs.
3) Offer a High-Deductible Health Plan (HDHP) in combination with a Health Savings Account (HSA) to get lower premiums and tax benefits.
4) Choose an EPO over a PPO – both plans are nearly identical, except that PPO members can visit doctors and specialists that are out-of-network. However, the networks are smaller, whereas EPO networks are so large that it's unlikely that anyone would have a need to go out-of-network. Most EPO networks offer nationwide coverage and have over 500,000 doctors, specialists, and hospitals to choose from. This is a money-saving option because going out-of-network would result in having to satisfy a huge deductible and pay co-insurance, so that tends to deter people from venturing into uncharted waters.
5) Stay up to date with the latest developments in health care reform to take full advantage of state and federal programs that are specifically designed to save businesses money on group health coverage.
We at the New York City Business Group love finding ways for our clients to keep more of what they earn. Give us a callat 718-554-3425 to discuss viable strategies for achieving lower premiums and greater tax efficiency. Also be sure to ask how we can help your HR team administrate your group health insurance plan(s). We will discuss your company's responsibilities regarding COBRA and NYS continuation of employee health benefits after an employee is terminated.
Companies That Offer Group Health Insurance
Aetna is one of the nation's leading diversified health care benefits companies, offering a broad range of health insurance plans to both large and small businesses. Aetna provides NY businesses with access to affordable benefit packages, easy plan enrollment, and the knowledge to make informed decisions. On their website (aetna.com), you'll find tools and resources that employers and employees can use to effectively navigate the health care system.
Plans include: Aetna NYC Community Plan HMO, Aetna Open Access EPO, Aetna Open Access Managed Choice EPO, Aetna HSA, Aetna Indemnity, Aetna FSA, and Aetna Healthy NY.
As a subsidiary of UnitedHealthcare, Oxford Healthoffers a wide range of affordable and flexible health plans for small and large businesses in New York. Oxford Health has two great networks to choose from. Both the Oxford Freedom and Oxford Liberty POS networks will give your employees national health coverage. With a large variety of group health plans and dental and vision riders, Oxford has the tools to build a great employee benefits package for your business.
Plans include:Oxford HMO, Oxford Exclusive Plan Metro, Oxford Ease, Oxford Metro EPO, Oxford HSA Direct Plan, Oxford HSA Exclusive Plan, Oxford POS Freedom, Oxford POS Liberty, Oxford Freedom Plan Direct, Oxford Primary Advantage, and Oxford Healthy NY.
As the parent company of Group Health Incorporated (GHI) and the Health Insurance Plan of Greater New York (HIP), EmblemHealth is a traditional New York State insurance company that offers benefits to small and large businesses, as well as federal and state employees. For over 80 years, GHI and HIP have been insuring the labor unions and government employees in New York City and can boast one of the best doctor and hospital networks in New York City. The small business suite of products includes seven health plans, five RX choices, and four dental plans. Emblem's small group health plans offer unique benefits that no other companies offer, such as a $0 co-pay for dependent children, doctor and specialist office visits, and a $0 co-pay for generic prescriptions. Emblem also offers a full line of mid-market and large group health plans, which have the most flexibility and the greatest number of plan options available.
Plans include:Emblem PPO, Empire PPO HSA, Emblem EPO, Emblem EPO HSA, Emblem Compahealth HMO, and Emblem Healthy NY.
Empire Blue Cross Blue Shield
Empire Blue Cross Blue Shield is a leader in providing group coverage to New York businesses. Empire BCBS can offer NY businesses the largest nationwide doctor-hospital network that includes 84% of the doctors and 94% of the hospitals in the USA. Combined with the recent introduction of several new small and large group health plan products, this makes Empire BCBS a good choice for Group Health, Dental, Vision, Life, and Disability.
Plans include:Empire Prism EPO, Empire Essential EPO, Empire Value EPO, Empire Direct HMO, Empire HMO, Empire POS, Empire PPO, Empire PPO Plus, Empire Total Blue Choice, and Empire Healthy NY.