Interest in Group Health Plans is on the Rise
There are some major advantages to group health insurance versus an individual policy. First, group plans are now far less expensive than individual coverage, at least in Pennsylvania. Check out this example quote comparison report to see for yourself! Next, a company health plan can really make a positive impact on your hiring efforts. Finally, it’s just easier! For example; there’s a combined monthly bill, uniform coverage for all of your employees, big tax benefits and more. As a result many small business owners are asking if their company could qualify for group health insurance. Some common questions we hear are:
- How many people need to be on the plan?
- Do I need prior coverage?
- Does my company have to be incorporated?
- Do I, the employer, have to pay 100% of the costs?
What you need to qualify for group health insurance in PA
Pennsylvania has relatively low standards to qualify for a group health insurance coverage. And while each insurance company has their own standards, it pretty much boils down to this:
- First, you must enroll more than one person on the plan. After all it’s “group” insurance, right?
- So two employees is the minimum. However they can’t be exclusively family members (same last name).
- Next the employer is occasionally required to pay something towards the cost.
- Nowadays many insurers do not require this.
- Your business does not need prior coverage or to be incorporated to qualify for group health insurance in PA.
- Sole proprietors, LLC, Partnerships, S-Corporation, etc. are all eligible.
- Last, but not least, you must meet the insurer’s minimum participation percentage requirement.
- This is the most complex rule. We’ll explain it more below.
Minimum Participation Percentage
Most insurers require that at least 75% of your full time employees enroll in the health plan. But this is often a point of confusion for employers. So let’s take a look at an example, to make this a bit easier to grasp.
Let’s say you have 15 employees. To meet the 75% participation requirement, you would need 11 of them to enroll in the health insurance plan, right? Maybe not.
- Suppose that 4 of the employees have coverage through their spouse. Since they have valid coverage, they don’t count against your total employee number. Hence, the number of eligible employees goes down to 9 and now you only need 7 to enroll…
- Hold on though, what if 3 of the remaining employees are part time? Since only full time workers count as eligible employees, now your number goes down to 6. And therefore if as little as 4 employees signed up for the plan you would meet the minimum participation requirements.
We mentioned the term “full time employee” quite a few times. But how many hours must an employee work to be considered full time? Well, as the employer, you decide the full time hourly requirements. But keep in mind there are some limits. For example, the minimum hours to be considered full time is typically 25 per week. While the maximum is 40.
One more thing, most insurance companies allow you to offer, at least, two different plans. So you can add a low-priced option, to convince your more frugal workers to enroll. Hence giving your company a better chance of meeting the participation requirement.
As the individual insurance market in PA seems to get worse every year, more and more small businesses are turning to group health insurance coverage. Doing so can save you money and help you retain high quality employees. However many insurance brokers have a difficult time showing their clients apples to apples comparisons of group and individual coverage, we do not! So if you are interested in seeing the numbers for your company please contact us. We can have your custom health insurance quote report ready and in your inbox in less than an hour! Please feel free to leave any questions or comments below.