How Many Employees Do You Need to Get Group Health Insurance?
If you ask an employer why they don’t offer employee benefits, a common answer is “my company is too small”. Sadly, many employers actually believe that! They don’t realize that there are many options out there – some designed specifically for those employers who have only a handful of employees. In fact, there are excellent employee benefit plans available for companies of all sizes.
Less than Three Employees
If you have less than three employees, while you can’t get group health insurance, you may be able to get excellent individual coverage. It’s not unusual for many micro-business owners or sole proprietors who are looking for comprehensive health and dental benefits to choose to use themselves or offer to their employees, an individual health plan (GroupHEALTH has an excellent option called Soloplus). These plans provide health and dental benefits that help cover common expenses not covered by government plans. They may also provide access to optional benefits (like critical illness or disability), which are typically only available for large groups.
Three to Sixteen Employees
Small businesses are the economy’s secret engine: there are hundreds of thousands of this size of business across Canada. While you may think that having three employees is not enough for group health insurance, the reality is that you can get coverage, and it does make sense for many businesses. Remember, employee benefits are a tax-deductible expense. They’re also a great strategy for attracting and retaining employees, and often small business owners need coverage for their own families. Even if you only have a couple of employees right now, providing employee benefits may actually help you grow your business in the future.
When you have a small number of employees, your benefits are pooled with other similar businesses. Those in “the pool” support each other during high and low claiming years. This helps keep premiums stable and affordable. That way if your company has high claims one year, your premiums don’t skyrocket – the group helps smooth big fluctuations.
As a small business looking for your first employee benefits plan, you’re going to want a plan that is:
The good news is, GroupHEALTH offers the Smart Plan for Small Business. It was created for “newbies” who don’t currently have a plan. The idea is to provide cost transparency and cost containment tools to help make this first foray into employee benefits a successful one.
The core employee benefits plan includes basics (like health and dental) as well as more sought-after benefits such as virtual healthcare (through Akira) and short-term counselling. The best part is that it’s flexible and configurable. You can opt-out of benefits that your employees don’t need. It’s a great starting point for group health insurance.
More than 16 Employees
If you have more than 16 employees, it’s very possible that you may have already sponsored an employee benefits plan.
Whether you have already sponsored a plan, or if this is your first, it should not be an “off the shelf” cookie-cutter plan. It needs to be configured to maximize the value it’s giving your business and your employees. Each company is different, so what works for one company isn’t necessarily the best fit for another company.
At GroupHEALTH, we can support different classes of employees (often different roles, like management and employees); across different divisions; in different locations. Working with our Advisor Partners, you can customize the coverages you will provide as well as the coverage levels that make the most sense for your business.
With larger businesses, you can also look at alternative options like ASO. ASO stands for “Administrative Services Only.” In this situation, the employer self-insures their benefit plan, and an independent third party administers the plan and pays claims. ASO arrangements work well for companies with a long history of stable claims.
Remember that ASO arrangements can be riskier for some businesses, especially when it comes to prescription drugs. High-cost specialty drugs can cost hundreds of thousands of dollars. For a company that is self-insuring, a single employee requiring specialty drugs can be detrimental to the entire plan.
GroupHEALTH’s solution is Hybrid ASO. This means you still save money by self-insuring most elements of your plan, except for prescription drugs. With Hybrid ASO, prescription drugs are fully insured. It’s really the best of both worlds: get cost savings for large businesses who can cover low-risk claims but protect your business from the high risks that come with prescription drugs.
Planning for the Future
By this point, it should be clear that businesses with just about any number of employees can get group health insurance. There are different plans and different options for businesses of all sizes.
What’s important is to plan for the long term. Whether you’re starting off with three employees (including yourself!), or if you have 200 on the payroll, you must make sure the plan is sustainable. This means ensuring there are cost containment tools built into the plan. Things like Smart Rx Solutions for managing prescription drug costs, or disability management services to control disability benefit costs, can help protect the financial health of your employee benefits plan.
Your plan must be flexible and configurable so that your plan can grow as your business grows. The right Advisor Partner can help guide you and ensure your plan continues to support your goals over time.
Good Advice is Key
Are you wondering if it makes sense to sponsor employee benefits, given the size of your business? Do you already sponsor an employee benefits plan and are looking for something better? Review your options with one of our licensed advisors on the phone or contact us for a comparison quote.