KSG Solutions for Small Groups
Companies with under 50 employees are considered small group in all but three states. Offering a traditional group health plan at this size can be very expensive, which is the number one complaint for over 54% of small groups that offer a health plan according to our research. Many small groups do not offer anything at all.
Why so expensive?
The main reason small group traditional health insurance can be so expensive is because there is not a big enough risk pool. There are not enough people which means the underwriters have to be careful because if one person gets really sick, it will be costly to them. To protect themselves from this adverse risk, the premiums must be relatively high, and they go up each year because everyone gets a year older. If you do offer a plan, you must pay at least 50% of the employee’s premiums in many states.
Participation Requirements
The second reason small group traditional group plans can be ineffective is because of participation requirements. Most insurance companies require at least a 75% participation from employees. This is not feasible for many small groups. Furthermore, there are no distinctions between full-time and part-time, salaried or non-salaried, etc. This means you cannot cater to each of these groups - your plan has to be extremely broad to cover everyone.
Let’s Fix It
The most effective and easy-to-implement solution is using an ICHRA health plan. These are group health plans where you set the cost, do not need a participation requirement, and can give different dollar amounts to different classes of employees. It allows cost control for the company and freedom of choice for the employees. These can be implemented at any time of the year through a special open enrollment period, or they work on a normal calendar year.