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Small Group Health Insurance

There are many things that go into creating small group health insurance.  For someone who needs health insurance for a small group, understanding the basics can drastically impact your costs.  And this will help you to better understand how your small group can get the most suitable health insurance coverage.  You can find a health insurance that works for your small group more easily when you know more about how it works.

Factors That Influence The Price Of Small Group Health Insurance

All group health insurance rates are usually calculated by the insurance companies actuaries based upon two primary factors – the cost of medical coverage and the amount of use of the insurance.  The cost of medical coverage is based upon the geographical location. 

Costs for medical care vary greatly from state to state and even region to region.  The amount of use is the projection of the average amount of medical care people in the plan will need.

It is important to understand the insurance company’s way of thinking.  The insurance company wants to reduce the amount of money they have to pay out and increase the amount of money they make.  They are, after all, a business.  They want to insure people who are going to be using their coverage the least possible amount.  That means they want to cover people who use cheap medical services and do not get medical treatment often.

With a small group, the insurance company is leery because the whole idea of group insurance is signing up a large number of people to spread the risk over many people.  However, with a small group insurance plan the number of people signing up is far less than an average group and therefore the risk is higher.

Group health insurance works off the idea that the insurance company is getting a number of people signed up all at once which is good for their business.  They like to encourage group sign ups because group insurance is popular and reliable business for them.  That is one of the reasons they offer group insurance.  They feel that they stand to make more money on group policies because they are basing the factors they use to create the policies on a general guideline and therefore they know there will be some people who fall outside those guidelines.  Those people are the real way the insurance company makes it money.

With group policies, the insurance company charges higher rates, because everyone who belongs to the group is eligible, regardless of the risk they pose. Therefore there are people who would normally be refused an individual policy who get insurance through group coverage. Also, since many companies subsidize a portion or even all the cost, often employees don’t realize how much they are paying per year in premiums.

The Influence Of Underwriting On Small Group Health Insurance

With a small group health insurance the insurer still has to provide one rate to everyone insured.  That is good for the insurance company, especially if there are only a few people who would actually really qualify for the rate, with others who would normally fall at a lower rate under individual coverage.  In the end, it is the insurance company that wins out on small group health insurance.

Basically, small group health insurance can vary greatly in cost due to your individual employees because each individual may be examined by the insurer.  With a large group they take an average assessment because there are too many people to worry about the individuals.  With a small group there are not so many people that an average will do, so they look at each person, which means that everyone could pay higher premiums if one person is considered a high risk.

This is something to keep in mind if you have someone who is a high risk to insure.  Your employees need to understand their options.  You may also want to look around for a company that offers a range of options, such as optional coverage.  These companies may be able to provide you with the best rate for all your employees with the higher risk employees being able to get the optional coverage to meet their needs without the other employees have to pay too much.

Options In Types Of Small Group Health Insurance Plans

Typically the best and most affordable option for small group health insurance is through a managed care plan.  Managed care plans offer you a service where you have a premium, deductible and co-pays.  These are different out of pocket expenses for the employee.

Premium: The amount paid each month to be a part of the insurance plan.

Deductible:  The amount a person must pay before the insurance company offers any coverage.

Co-Insurance:  The percentage of each bill a person must pay after the deductible is met (usually until a stop loss limit of maximum out of pocket threshold is reached).

To make sure your employees have the best coverage you want to give them the lowest possible premiums, deductibles and co-insurance levels.  The whole idea is to make health care more affordable. Of course the lower the deductible and the co-insurance level then the higher the premium will be so many employers are turning to high deductible health plan (HDHP) options such as health savings accounts (HSA’s) as a way to decrease the cost of health insurance for their employees.

One other thing to keep in mind is that there are different types of managed care plans.  With some plans you have to choose from medical providers that are part of the insurance company’s network or you are not covered.  This is an HMO plan.  With other plans you can choose any provider, but you get the best prices for choosing providers in the insurance company’s network.  These are PPO plans.

How To Choose The Best Small Group Health Insurance Plan

Choosing the best small group health insurance is something you want to do for your employees.  To help you decide on the best company there are some tools you can use. 

1. National Committee for Quality Assurance (NCQA): The NCQA helps to put together reports on HMOs and PPOs based upon audits and customer reviews.  You can review them to see how each program is rated.

2. Better Business Bureau (BBB): The BBB is nationally recognized as the business monitor.  You can get information about complaints and issues that have occurred with any company from the BBB.

3. A.M. Best: A.M. Best is an independent company that rates the financial strength of insurance companies. This is a great way to check out an insurance companies ability to pay claims and remain financially solvent.

You will also want to shop around and just see what is out there.  Compare the information you get to find the best company to meet your employees’ needs.

Get Small Group Health Insurance Quotes Now!

You can start your search by getting quotes from various companies.  Use our quote tool to get started and you will soon have multiple quotes to compare and the best small group health insurance quote is sure to be among them.

Enter your information in just one time at our free quote tool and you can compare plan and quotes from top insurance companies and agents in your state.

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