Different Types of Small Business Group Health Insurance

Majority of Americans who own a health insurance policy are covered through an employer-sponsored small business group health insurance plan. Though health insurance regulations differ from state to state, companies all over the US spend billions of dollars every year for their employees' health insurance.

Due to the ever-rising cost of health care and prescription drugs, companies have had to increase their employee benefit budgets many fold. Large companies can afford this but smaller companies have been forced to cut down on the health benefits offered to their employees. Even if the benefits are not reduced, companies are asking their employees to either increase their share of monthly premium or bear 100% of their dependents' premium.

Benefits of Small Business Group Health Insurance Plans

Most companies offer business group health insurance to attract qualified employees. To retain these qualified employees, companies normally include certain clauses and pre-conditions that prevent employees from obtaining individual health insurance. If employees seek employment with other companies, these pre-conditions and clauses prevent them from switching jobs. Since the waiting periods for these pre-conditions to get over are often quite long, employees prefer not to change jobs or even switch insurance companies. They are often ready to work for lesser wages to enjoy the benefits of small business group health insurance plans.

Small Business Group Health Insurance Options

In most American states, a company with a minimum of two employees is eligible to apply for small business group health insurance. However, this may vary in certain cases. Companies applying need to provide a verification of their business operations.

The types of coverage available and the premium amount per employee are determined by the number of employees to be insured under the small business group health insurance plan. A company with two to fifty employees is classified as a small business and it can avail of a small business group health insurance plan. Generally, companies having large number of employees get the health insurance plans customized to suit their requirements. These customized health insurance plans include additional benefits, which do not feature in standard plans.

Some large companies prefer self-insurance and the insurance carrier is merely used to administer health and benefit plans. These large companies act as insurers and assume the risk of major medical claims by placing a sizeable bond with the state authorities and then use this bond to settle medical claims.

Most companies are classified into three categories for group health insurance based on the number of enrolled employees - small group, mid-size group, or large group. There are common standards for these classifications, though the insurance company or state legislation reserves the right to determine the number of employees that are required to fall into a specific category of the small business group health insurance.