Because
group insurance rates are two to three times as
expensive as individual plans, we believe
that the best option for most small businesses of
less than 20 employees is to let the employees sign
up for individual coverage, rather than group coverage.
These are the main advantages of this strategy:
- Individual
plans are 100% portable, meaning that they are
not tied to the employer's business. The
employee can take the coverage with them, wherever
they go.
- Because
they are individually underwritten, they are much less expensive. However,
this also means that someone could be declined due to pre-existing conditions.
So individual plans only work if the employees are all in good health.
An
employer cannot pay for individual health insurance, but in most states you
can reimburse your employees tax-free through a Section 105 HRA Plan.
An HRA, or Health Reimbursement Arrangement, is simply an agreement that the
employer makes to reimburse certain medical expenses, including health insurance,
that the employee incurs. The reimbursement is considered a tax-free
fringe benefit to the employee, and a business expense for the employer.
The
end result is that you may be able cut your costs in half, while providing
your employees with better coverage. This works well for small businesses
with healthy employees. To learn about whether individual health insurance
coverage and an HRA plan is right for you and your employees, please visit
our 105 HRA Plans for Small
Business Owners page,
If
you are interested in true group coverage, please call us at 866-749-2039,
and ask for our group coverage specialist, Randy Rush.
