If you own or run a small business and are in the process of considering group health insurance and how to do it, read on; This article is for you.

Group health insurance for small businesses

The types of groups eligible for group insurance coverage have expanded significantly over the years. This broader eligibility is reflected in both the regulations and the underwriting philosophy of group underwriting insurers. Group insurance is allowed today for group types that did not exist in the early days of its development, and is written about some group types whose applications would not even have been considered when the product was first introduced. Within the United States, the National Association of Insurance Commissioners (NAIC) Model Group Insurance Bill allows coverage in four specific categories of groups. Many states allow coverage of additional types of groups not identified in the NAIC model bill.

Single Employer Employees

Single-employer employees included the first category mentioned in the model bill NAIC. An employer can be a sole proprietorship, a partnership, or a corporation. Additionally, employees may include not only the immediate employees of the employer, but other categories as well. The single employer group is by far the dominant type of group that receives group insurance coverage.

Debtor-creditor groups

Group credit insurance (life and disability income) has grown rapidly in the United States, reflecting a credit-oriented society. The contract owner in these plans is the creditor, such as a bank, small loan company, credit union, or any business that has large accounts receivable, including those that rely heavily on credit card customers. If the debtor dies or is disabled, the insurance proceeds are generally paid to the creditor to settle the debt that provided the basis for the coverage rather than to the insured persons or their beneficiaries. Debtors generally must have a binding and irrevocable obligation to repay the debt for coverage to be affected.

Union groups

Union members may be covered by a group contract issued to the union itself. The insurance must benefit people other than the union or its leaders. Generally, member contributions may not directly pay the full premium. However, it is common for payments to be made with funds contributed partially to the union by members specifically for their insurance and partially by the union with its own funds. In some cases, the union pays the entire premium out of its own funds. Group contracts are often drawn up in multiple employer groups and issued to the trustees of a fund created through collective bargaining processes. This arrangement is typically established by two or more employers in the same or related industry, by one or more unions, or even jointly by employers and unions. The Taft-Hartley Act prohibits US employers from giving funds for employee welfare plans directly to a union; hence the need for a separate trust and its trustees to act as group contract owners and decision makers.

Trust from multiple employers

Multiple Employer Trust (MET) a subset of the Multi Employer Welfare Agreements (MEWA) Market Group benefits for employers with a small number of employees. METs can be sponsored by life insurance companies, independent administrators, or two or more employers in the same industry. The sponsor designs the plan, selects the employers (or other groups) that are allowed to participate, and usually handles the administration. Most trustees function passively and are used primarily as nominal group policyholders for insurance held by or on behalf of a MET. All financial transactions flow and are accounted for by the trust. Member employers pay premiums to the sponsoring organization, which uses the money to purchase a group contract. The entire group of employers has an experience rating, which allows for greater credibility to the group’s own experience.

Self-insured METs take responsibility for making claim payments through an external administrator. They must evaluate the appropriate premiums (contributions) and maintain adequate reserves. In the early development of METs, this was not always done correctly. METs have proven to be a source of regulatory confusion, compliance issues, and even fraud. A report from the United States General Accounting Office (GAO) showed that from January 1988 to June 1991, METs left some 398,000 participants and their beneficiaries with about $ 129 million in unpaid claims and many other participants without insurance. More than 600 METs failed to comply with state insurance laws and some violated criminal laws.

The GAO report confirmed that state efforts to regulate METs, enforce state laws, and recover unpaid claims were hampered because states were unable to identify METs operating within their jurisdictions. Additionally, when complaints came to the attention of state regulators, they were often frustrated that the METs claimed they were exempt under the Employee Retirement Income Security Act (ERISA). As a result, in 1992 the US Congress enacted legislation requiring self-insured METs to comply with state insurance regulations regarding the adequacy of contributions and reserve levels. There has been a significant reduction in the number of self-funded METs since the legislation was adopted.

Now that you understand the basics of organizing a group health plan and want to know the actual prices, feel free to visit our website at http://www.health-insurance-buyer.com for an Individual Consultation and Quote without complications.