Individual health plans in the workplace can deliver two major benefits upfront. One, it will give each employee a much wider range of plans to select from, instead of the one or two options a traditional group plan might offer. And two, it will allow you, the small business owner, an opportunity to save 30-50 percent on your health insurance costs.
This option also presents an opportunity for businesses that currently do not offer health insurance the ability to do so at little or no cost to the employer. Since there are no contribution requirements with individual health insurance an employer can pay as much or as little as they desire for their employees health insurance.
Options, options, options.
Employees would have the ability to select a wide range of plans from multiple carries throughout the state. While Anthem Blue Cross Blue Shield might be priced best for one employee, Medical Mutual of Ohio might work better for another. When making such a decision employees will be able to consider a company’s network of doctors, different plan options/benefits and monthly price.
Put it in the bank.
Business owners are always about the bottom line and hands-down individual plans will cut a tremendous amount off any business owners health insurance budget. Because group plans are guarantee issue and include certain state mandated benefits, they are, on average going to cost twice the amount of a standard individual plan.
While those two very attractive reasons might already have you reaching for the phone, there are a few drawbacks you should know about first before seriously considering this option.
What do you mean I have been declined?
The main reason this will never be a slam dunk idea (at least until 2014) is due to a little something called medical underwriting. Right now every employer sponsored health plan comes standard with guarantee issue. This allows any employee, regardless of medical history, to be accepted on your group health insurance plan. Something (again, at least until 2014) individual health insurance cannot offer. Chances are the more employees you have the better chance you run of someone not being able to get through underwriting.
Batteries not included.
There are also certain benefit mandates a group health plan is required to cover that an individual plans can exclude to lower cost. The most notable benefit is maternity coverage for women. Maternity can be added to an individual policy, however it does not come standard (sometimes only available on certain plans) and is expensive enough that you will only want to add it if an employee is serious about starting or adding on to their family.
No tax deduction?
When you dip your toe in the individual health insurance market you are allowing your employees to not just have complete control of what type coverage they want, but also which company works best for them. If you have employees scattered across several different insurance companies it might be difficult to set up billing that will allow you to tax deduct the expense. Employers are not allowed to directly pay for an individual health insurance plan.
What’s a List Bill?
If you can get several employees to land with the same company (minimum two) you can set up something called a list bill for automatic payroll deductions. This will allow you to facilitate payment for each employee’s plan. Otherwise the employee will be responsible for handling each monthly payment themselves.
While there are some very appealing aspects for a small business owner to consider, this solution will not work for everyone. However it does provide a relatively small business, not concerned with guarantee issue, an opportunity to trim a significant amount off their monthly health insurance cost.