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Health insurance is regarded as one of the most valuable things that an employer has to offer by way of benefits to his employees. 60% of Americans have health insurance through their employer, and report it as the most useful benefit that an employer can offer. Employers who offer health insurance have a lower employee turnover rates, and can use them to attract more qualified workers. So, one of the biggest concerns you should have as an employer is how to provide your employees with access to affordable medical insurance. Small business medical programs are widely available, and it is important to know what to look for when trying to find a plan that works for you.
There are two principal classifications of employer-based affordable medical insurances: small business medical insurance, which is for businesses with fewer than 50 employees, and large business health insurance with is for businesses with more than 50 employees. The main difference is that large business health insurance, unlike small business, does not need to be offered on a guaranteed basis (which we’ll look at momentarily)
One important thing to be aware of is that insurance regulations will vary from state to state. Some states, for example, have rating band requirements, which restrict the amount that the group rate can vary within a certain percentage. So for example, suppose your state has a rating band requirement of 25%. This means that, depending on the medical information that your company (with regards to the overall health of the employees) is supplied with, your company’s group rate can be no more than 125% of the average group value and no less than 75%. Other states have community ratings, meaning that individual underwriting is done away with, and rates must be based upon community averages. (These are two tactics that states use to ensure that people with pre-existing conditions also have access to affordable medical insurance.)
Small business medical insurance, by Federal law, cannot turn away any employee from coverage, no matter what their medical history may be, nor can any small business turn be turned away by a health insurance provider. This creates what is now called a “guaranteed issue.†Large industries, however, can be turned away based on their claims amount, making it slightly easier for small businesses to get into the market.
