Understanding Requirements and Premium Rates for Small Group Health Insurance
A businesses having less than 50 employees are being considered as a small companies while the companies with 50 full-time employees or equivalent or more, are those considered as legally the large employers. Since small companies apparently differ when it comes to number of employees as compared to large companies, the laws regulating group health insurance policies for each type also vary. It is important that this topic is being discussed in detail for better understanding about small group health insurance.
Understanding the Coverage Requirements
In searching for new talents and maintaining a high employee’s retention rate especially to keep best workers, providing group health insurance coverage is one of the important factors for most employers. This why even small companies are required by the law to provide group health insurance to their employees, they tend to provide one since they know how this benefit attracts and maintain best employees and talents.
Although federal and state laws may apply to small businesses, there are various factors are still being considered such as the type of business, how big or small the company is, and if their plan coverage is being provided by an insurance company. However, because of the existence of Affordable Care Act (ACA), small group insurance plans has to meet certain level of requirements. ACA set benchmark to make sure that employees get the right amount of benefits.
The different levels or “metal tiers” of benefits are simply based on what the plan pays of the average total medical expenses.
- Platinum plans: These are the best ones, but also the most expensive. They usually cover as much as around 90% of medical expenses
- Gold plans: These plans cover 80% of medical expenses
- Silver plans: A silver plan would usually cover around 70% of medical expenses
- Bronze plans: These are the most affordable ones and offer the least benefits, paying just around 60% of medical expenses
The tiers mentioned above reflect the average medical expenses they may cover. It isn’t the same as coinsurance, which requires an individual to pay a certain percentage of the overall medical expenses.
When it comes to group insurance coverage, there are also several other requirements that are based on laws that being covered under ERISA, HIPAA and other such acts.
Determination of the Premium Rates
Due to implementation of ACA, premium rates have changed a lot in different ways that they used to be. They are based on the modified community rating, which takes limited factors into consideration for coming up with the premium rates. Factors included are age, geography or employees’ lifestyle like if he or she is a smoker or not. Let’s say in a case of a middle-age male worker and a regular smoker who’s suffering from cancer, the rate would be higher then. However, the rate of a 30-year old healthy male employee with diabetes would be the same.
But still the bottom line is, it would still depend on the state if an employer may allow their employees to choose their insurance company. And in similar way, insurance companies may also be able to offer employees various plan options within a particular level (platinum, gold, silver or bronze).