Updated August 8, 2019
As a small business owner, it may be in your best interest to offer your employees a comprehensive benefits package, but how do you know what works and what doesn’t? Health insurance is a good place to start, but there are so many options available. For instance, what is the difference between group and individual health plans for your employees? The names can be deceiving, so take a minute and find out how they differ.
Simply put, group health insurance is a health insurance plan you extend to your business’s staff and, perhaps, their dependents. With a group health insurance program, small business owners pay either all or part of the cost of the monthly premiums for their employees but typically reap certain tax benefits as a result.
Individual health insurance is purchased by individuals or families on their own, separate from any business. Unless they are provided with employer-sponsored health insurance, most people tend to purchase individual coverage on their own, although they no longer face a possible tax penalty due to the repeal of the individual mandate from the Affordable Care Act (Obamacare).
When buying their own individual plans, employees may have more control over what plan to choose, but they may end up paying more. As a small business owner, you might find ways to legally help employees afford health insurance, but the cost of individual insurance plans is ultimately the responsibility of the employee.
There are many differences between these two models of health insurance, both for you as the employer and for your staff such as:
There is no right or wrong answer when it comes to health insurance planning for small businesses because there are many variables to consider. A licensed insurance broker can list the pros and cons of each model and help you develop a strategy that is best for both the company and employees.
To learn more about your options for small business health insurance coverage, visit eHealth.com or speak with one our licensed health insurance agents.
Always consult your tax and legal advisors to understand your specific tax and compliance situation. This article is for general information and not intended to provide any tax or legal advice.