The Top 3 Ways to Get Employee Health Insurance

How do I to get employee health insurance for my company?

It’s not the easiest question to answer, and in this day in age it is getting more and more difficult to get cost effective health benefits for your company.  It’s even harder if you are in the small group category. Whether it’s company size, average employee age, or overall employee health, employers are having a hard time offering benefits to their employees at an affordable rate. Offering benefits to new or current employees is a big competitive advantage across all industries, and with the increasing rise in health premiums, employers are having a tougher time offering these benefits to their employees at reasonable prices. There are multiple ways to get coverage, each with their advantages and disadvantages in trying to provide not only the most cost effective coverage, but also the best benefits possible.

 

The marketplace approach

The standard way employers try to obtain coverage is through the traditional benefits marketplace. This means simply going online, filling out an application with basic information about the company and its employees, and getting direct quote options on the spot. Benefits of going this route include convenience and reliability, and the main advantage of the marketplace is that no one or no groups of employees can be denied coverage for any specific health reason (regardless of the significance). Ironically, the groups who are hurt the most going this route are the younger and healthier companies. That’s because young, healthy company pay the same premium as every other company. Seems a little unfair doesn’t it? Well that’s because it is.

• Good for: companies with average age of 45+ or less than average overall health.
• Bad for: small, young, relatively healthy companies.

 

The PEO approach

The next most common approach is to go through a Professional Employer Organization, or PEO. For those of you who aren’t familiar with a PEO, it’s an organization that not only offers health benefits, but other services like HR and payroll. A lot of employers like going the PEO route for simplicity. PEOs combine all of their back office services in one place. Now you might be thinking, “then why wouldn’t everyone want to use a PEO?” PEOs charge a relatively expensive monthly fee per employee to use their services, which can almost outweigh the savings you are getting by consolidating everything.

A lot of employers feel comfortable with paying this fee due to convenience, but a lot of people don’t feel they need to spend hundreds of extra dollars a month for such services. PEO’s are also extremely inflexible with tech systems and force you to use their own. So for example, if you already have preferred payroll systems, you’ll be switching to the PEO system if you go the PEO route. Although a PEO seems easy, convenient, and cost effect from the outside, you could end up unhappy if your company explodes in growth or likes the current systems in place.

• Good for: Companies under 8 employees.
• Bad for: Companies between 10-100 employees who are relatively young and healthy, and also don’t want to pay a premium for the PEO service.

Leaving a PEO

It’s important to note that companies that are currently working with a PEO have the option to leave the PEO arrangement and explore other insurance options that might better suit their needs. While a PEO offers convenience, it might not always be the most cost-effective solution for certain companies. Exploring alternative insurance approaches, like the captive option mentioned below, can provide more tailored coverage and potentially better rates.

The new approach

The new option is an innovative product in the health space that we offer here at Founder Shield.  It’s called the small group “captive.” Small companies (under 100  employees) currently don’t have the ability to get medically underwritten, which is why the rates are the same across the board in the marketplace approach.That’s where the captive comes in.

The captive gives small companies the chance to get underwritten, allowing them to pay the rates based on the actual age and health of their employees, as opposed to the rates that are set by the marketplace. As a result of this, the companies that would see the biggest savings on their health premiums would be the young (average age about 40 or less) and healthy companies. The younger and healthier the company, the better rate you’ll get.

• Good for: Companies who are under 100 employees with an average age under 45.
• Bad for: Companies with 100 or more employees, or small companies with average age of over 45.

 

The Captive with the Help of a BOR

The captive gives small companies the chance to get underwritten, allowing them to pay the rates based on the actual age and health of their employees, as opposed to the rates that are set by the marketplace. As a result of this, the companies that would see the biggest savings on their health premiums would be the young (average age about 40 or less) and healthy companies. The younger and healthier the company, the better rate you’ll get.

• Good for: Companies who are under 100 employees with an average age under 45 and using a BOR to navigate the captive process.
• Bad for: Companies with 100 or more employees or small companies with an average age of over 45.

At the end of the day, whether you go through the marketplace, a PEO, or the captive, you will be able to offer your employees health benefits. The question is: how much are you willing to pay, and for what convenience? All 3 options have their benefits and their flaws, and all 3 also have different eligibility requirements, but if your company fits into the captive, it is a no-brainer to get your company on board and start saving money while offering your employees a discount on their health benefits.