Deciding how much group business health insurance to buy is a complex process that must take into account many factors, including the number of employees you have, current and desired profit margin, plans available in your area and employment law. Even when you have all the available information, often you still have to choose between several equally attractive (or unattractive) options. Still, there are some basic questions to consider before making a final decision.

Employment Law

Learn about employment law as it applies to health insurance coverage. Some of this is determined at the state level, though there are some overriding federal laws, and your city or county may have other guidelines. The law lays out a basic groundwork for your decision-making about group insurance. For example, federal law makes it illegal to offer one level of insurance to some employees, but not to others of similar circumstances. It's the job of your insurance broker to know the laws in your area, but it never hurts to get a summary from a second source.

Makeup of Your Work Force

Look at the demographics of your work force. A sales office employing mothers and fathers has different needs from a health club full of single 20-somethings. Talk to your employees directly what their health insurance needs are. If you have the numbers available, you can present employees options like this: Insurance plan A costs me $100 a month. Would you prefer that, or insurance plan B, which isn't quite as good, but costs $50, leaving me $50 a month to spend on other benefits?

Your Own Needs

Keep in mind that the company group insurance plan will be your health insurance plan, too. Don't buy insurance for your company that won't fulfill your own needs. If you're in a different stage of life from most of your employees, you might want to set up optional programs. This allows employees to select from multiple levels of insurance, paying more for additional benefits they might want. Work with your insurance adviser to be sure the arrangement complies with applicable laws.

Budget

Health insurance is often worth whatever you spend on it, but there is such a thing as realistic affordability. Generally, you'll do your budgeting in several steps. First, you'll find out how much you can afford. Second, you'll find out realistic costs for what you have in mind. Third, you'll redo your budget based on the actual costs of the services you want. Don't overextend yourself on health insurance. The only thing worse than not having it is losing it after shelling out six months worth of premiums.

Source:

"Small Business for Dummies;" Eric Tyson and Jim Schell; 2000