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Small Group Health Insurance: Know Your Options

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People who have been employed with a large or medium size company usually have had group health insurance. Several different approaches are used nowadays depending on how much the company wants to contribute and whether or not they want to provide full coverage traditional insurance, an HMO or some type of cafeteria plan. In any case, the employee usually pays only a small fraction of the actual cost of the insurance. Consequently, leaving the company and having to find your own insurance comes as an earth-shattering expense to many people.

Group Health Insurance AgentsPrivate health insurance plans can be expensive although there are ways to keep the premium affordable, especially if you are in good health. However, if you are starting your own business or are simply taking a position with a company that does not offer health insurance, you may have an opportunity to stay with a small group plan. Small group plans can have as few as two people in them. The only criteria is that the group must exist for a purpose other than getting health insurance. Thus if you have your own business and hire other uninsured individuals, you are eligible for a group plan. In fact, the person you hire does not even have to work full time. You simply need to keep a record of the work performed and the amount you paid. States have individual requirements regarding the amount of salary that must be earned, so you will need to check with your state insurance Commissioner or with a knowledgeable agent. 

Most insurance carriers can offer higher quality medical plans to groups at lower rates than that of individual coverage. In addition, medical underwriting is not a factor with a group. The primary requirement to avoid the “pre-existence” clause is to maintain continuous coverage. As long as you have never had a gap longer than 63 days without insurance, any pre-existence clause can be waived. This does not hold true with private health insurance, however, even if you have had continuous coverage.

If you are not self employed with a business of your own, you may still be able to get group coverage. Consider organizations you belong to such as clubs or fraternities. Even a church can obtain group coverage if enough members want it. 

Group coverage gives you some options, although you will probably have to do some research to find the plan that is exactly right for you.  A plan that works with a network of doctors is more likely to include "wellness benefits," such as routine physicals, screening procedures, immunizations, etc.  Coverage for dental, vision services and prescription drugs always involve extra costs, and it may be possible for some group members to have the extra riders while others elect not to take them.  Disability coverage and long term care protection will be separate from the health insurance itself.

If you are the employer, you can choose to pay most or all of the premiums and deduct them as a business expense from your own taxes. Those who are self-employed can also deduct premiums; otherwise, the insurance premiums and other health care expenses are subject to the 7 ½ % rule. 

Managed care plans rather than traditional policies are still available.  With managed care programs, you  use the doctors, hospitals and other medical providers who operate within a network approved by the insurance company. You can go outside the network, but the insurance will not pay. Many people dislike the managed care plans because of the restrictions, but the cost of traditional insurance will still make the plans worth consideration.

A more recent variation on the HMO is the PPO, or Preferred Provider Organization. With a Preferred Provider Organization (PPO), you still use a network of providers but you have the choice of going outside the network at a reduced benefit level. Furthermore, you are not required to get a referral from a primary care provider before going to a specialist or getting a second opinion. PPOs usually have an annual deductible after which  members must also pay a percentage of their additional medical costs. This is called "coinsurance."

Finding your own health insurance will be challenging, but not impossible. The best advice anyone can give you, however, is to stick with the established carriers. Many organizations claim to offer health insurance for surprisingly low premiums, but when it comes time to pay, you may find that the low premium is offset by the numerous clauses which allow the company to saddle you with the bill. Finally, regardless of the company you choose, take the time to thoroughly read the policy, highlight things you don’t understand, and ask questions. Then write down the answers so you know what to expect when a need arises.