As with many other things, when it comes to buying group health insurance, there is strength in numbers. And big numbers have traditionally gotten the best deals. Currently, a large number of individuals in Dallas, Houston and throughout Texas obtain coverage through their employers. Many of those employers are large companies with strong-arm power at the insurance bargaining table. If you're a small-business owner, however, there is no reason to feel left out.



The Small-Group Market

Small-group refers to the number of employees in a given company. It can be as many as 100, but is most often two to 50. In this market, health insurance prices have traditionally been based on two factors:

- Projected costs of medical services in a given geographic area

- Projected utilization of services

Projected costs can vary dramatically from area to area based on local medical practices, local prices, and whatever price discounts the insurance company has been able to negotiate with local providers. After calculating projected costs, the insurance company adjusts the costs for the expected utilization level of your particular group. Insurance companies estimate utilization of services based on factors ranging from the medical history of your employees and their dependents to age and gender. These details affect plan premiums for you and your employees. If a member of your staff is considered a greater risk, the group will usually pay a higher premium for insurance coverage.

Why underwriting is important

The majority of small-group health insurance companies use a process called underwriting. An underwriter analyzes risk factors (including the medical history of each individual) to estimate potential claims and determine a group's premium rate. The insurer's goal? To offer coverage at a fair price and to ensure adequate income to pay for future claims and expenses.

Small business coverage options.

Whether you are a small company or a Fortune 500 giant, you want to make sure you are getting your money's worth from a health plan. It's important to weigh the pros and cons of each choice when selecting a plan. While premiums vary among different carriers, recognize that there can be substantial differences in the benefits provided and in the amount your employees must pay out-of-pocket for services.

Things to Think about Regarding Small Business Coverage.

When you start searching for a health care provider for your company, these are things you should consider:

1. What information do I need to collect to get a quote?

All insurance companies will need a census of your employees that includes the number of employees, their age and gender, and the age and gender of all dependents to be covered. In addition, based on your number of employees and the practices of the insurance company, some insurance companies will ask each of your employees to fill out a medical questionnaire. They will also need your company's inception date and the effective date of coverage.

2. Half of my employees are insured elsewhere. What should I do?

This is a challenge for small business owners. If one of your employees has a spouse who has family coverage where he or she works, your employee may be covered on that policy, and not interested in the health insurance plan you offer. If you want to offer a group plan, be aware that your insurer may require you to cover all or most all of your employees. An alternative solution may be found in the individual health insurance market.

3. Can I purchase and offer individual plans to my employees?

Yes, but generally, with individual plans, your employees would be subject to individual underwriting. An employee who needs the coverage may not be eligible.

4. Do I need both group health insurance and workers' compensation insurance?

Group Health is optional; workers' compensation is usually required. In Texas, employers are required to provide workers' compensation insurance, which generally pays for medical expenses and loss of income for employee injuries that are work-related. Most health insurance plans specifically exclude work-related injuries.

If you're a sole proprietor, partner, or officer of a small corporation, you may not be covered automatically by your workers' compensation policy. If this is the case, you must determine whether your own health insurance has an exclusion for work-related injuries; you could have a gap in your own coverage.

Generally, most business owners should consider electing to cover themselves under workers' compensation if that option is available in their state. Check with your own insurance company for more information.