Group Health Insurance Tidbits
“I’m considering adding group health insurance for my employees. What do I need to do that the insurance broker won’t do?”
Your HR Survival Tip
It’s great you want to provide health insurance! Adding this benefit can be a big step due to the expense but you should find this will aid in recruitment and retention of employees.
You’ll want your broker to help you sign up for a Premium-Only Plan (POP) so you can take the employee’s share of any premium as a pre-tax deduction. Without a POP in place, any deductions must be made with after-tax dollars. You will always pay the full bill from the carrier and the employee’s share reimburses you.
Your broker will make a recommendation for certain plans but it will be up to you to decide how much of the premium is paid by you versus the employee. Our preference has you paying a percentage (50-100%) of the employee-only cost of the lowest level plan you offer. Employees then pay the remainder of that premium, plus the full cost of covering dependents or choosing a higher level plan. We prefer employees pay at least a small amount to save you money but to also avoid employees electing coverage just because it’s free rather than needed. You will find the amount a company might pay toward benefits will vary greatly based on your industry and ability to pay.
Reconciling the carrier’s bill every month is crucial. Insurance carriers don’t add or terminate employees as quickly as you might expect. You could see a back charge of 2 months of premiums because the bill is catching up on a new employee’s premiums. When someone’s coverage terminates, you submit their termination to the carrier but keep paying the full premium until the carrier pulls them off the plan and reimburses you for any premiums previously charged. If you try to deduct that employee’s premium off the bill, you’ll get a notice from the carrier stating you did not pay the bill in full and are now subject to cancellation. If an employee hasn’t been added or dropped by the end of 2 months, talk with your carrier or broker to ensure they received the change.
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