Group Health Business Insurance

Your employees are the life of your company. One of the best ways to take care of your team (and attract quality new hires) is to offer health insurance. That's true whether or not your company is legally required to provide health insurance. Group health insurance could boost employee satisfaction, reduce turnover, and contribute to a workplace where people thrive.

Group health insurance isn't just another business expense -- it's an investment in the well-being of your team and the culture you want to create. Let's talk about how to make that happen.

What is group health insurance?

Group health insurance is health insurance coverage for members of a group. It is typically less expensive than individual plans, because risk is spread across the group.

By "risk," we mean the chance of the insurance company having to pay out a large claim. There's always a chance that someone will file a major claim. But in a group, the cost is spread out among all the members, so the company can charge each person less, compared to the cost to cover a single person.

Business owners often (and in some cases, are required to) offer group health insurance to eligible employees and their dependents. Health insurance is separate from business insurance. Even if you don't offer health insurance, you shouldn't operate without small business insurance.

Who needs group health insurance?

Employers with 50 or more full-time employees must offer affordable health coverage. The number includes full-time equivalent employees, and the offer must extend to dependents. The coverage must provide minimum value -- a group health insurance plan is considered to provide minimum value if it covers at least 60% of what's covered under the plan.

Employers with fewer than 50 employees are not legally required to offer group health insurance. But many of these smaller businesses choose to offer health coverage anyway, as part of their overall employee recruitment and retention strategy.

Group health business insurance is popular with employees: according to KFF, 48.6% of Americans received health insurance through their jobs in 2023. (KFF is an independent health policy research organization formerly known as the Kaiser Family Foundation.) Group health insurance is an attractive component of an employee benefits package, as the employer typically bears the burden of the majority of the premium costs.

What happens if you don't provide the required health insurance?

An employer with 50 or more full-time employees may need to pay an employer shared responsibility payment to the IRS in the following circumstances:

The employer doesn't offer the required coverage, or
The employer does offer minimum essential coverage but at least one of its full-time employees purchases insurance through the Health Insurance Marketplace instead and receives a premium tax credit. An employee could receive the tax credit if the employer's coverage was not affordable or did not supply minimum value to the employee.

What does group health insurance cover?

The extent of group health insurance coverage depends on individual insurers and plans. Every plan is different.

Popular group health insurance plans include:

Preferred Provider Organization (PPO): PPO plans tend to have wide provider networks and allow members to access specialized services without needing to see a primary care doctor first.
Health Maintenance Organization (HMO): An HMO plan offers a more narrow network of providers. HMOs don't cover non-emergency care from out-of-network providers.
Point-of-service (POS): POS plans have a provider network. Members may have to see a primary care physician to get a referral to a specialist.
High Deductible Health Plan with a Savings Option (HDHP-SO): HDHP-SO plans combine a high deductible with a Health Reimbursement Arrangement (HRA) or Health Savings Account (HSA). Those are programs that let employers and participants contribute to a tax-advantaged savings account for cost-sharing or health spending purposes. HDHP-SO plans can be an HMO, PPO, or POS plan.

The types of coverage group health insurance plans can provide include:

Dental
Maternal care
Medical
Mental health
Pharmacy
Vision

Cost for group health insurance

The cost of group health insurance depends on your location, the size of your business, the demographics of your staff, and the type of plan you choose.

According to KFF's 2023 Employer Health Benefits Survey, the average annual premium for health insurance offered by employers in 2023 was $8,435 for single coverage and $23,968 for family coverage. Employers paid an average of $7,034 for single coverage (about 83%) and an average of $17,393 for family coverage (about 72%).

How to choose a group health insurance provider

If you have a small business with fewer than 50 employees (or less than 100 employees, in some states) you can purchase a group health insurance plan through the Small Business Health Options Program (SHOP).

You can enroll in SHOP by contacting your insurance company or reaching out to a licensed insurance agent or broker. The company or agent should answer your questions and help you or your human resources manager select a plan.

Questions you may want to ask your agent or insurance company include:

How many plans should I offer my employees?
What percentage of my employees' premiums can I expect to pay?
Should I offer coverage for part-time employees?
Should I offer medical, dental, or both types of coverage?

Small Business Health Care Tax Credit

Small businesses typically need to enroll in a SHOP plan in order to claim a Small Business Health Care Tax Credit. Businesses with 25 or fewer employees that meet specific criteria may be eligible for the credit, which can cover up to 50% of the cost of employees' premiums.

If you have more than 50 employees, speak with a broker or agent about your group health insurance options.

Self-employed individuals with no employees can use the Health Insurance Marketplace to get personal health insurance.

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