If you are a small business owner, you probably have considered offering your employees some sort of group health insurance plan. If you have and found the whole process an intimidating and confusing process, here are a few points that you may want to consider when the next insurance agent calls with an offer.

One of the first things to consider is whether or not you want to include all employees in your group plan. If you do, remember that most insurance companies won’t cover part time employees. To be considered full time, your employees must be working at least thirty hours per week. When you apply for a group plan, you will have to provide documentation to the insurance company that shows the hours each employee works. This is usually done with a copy of your quarterly report to your state’s department of labor.

Another important consideration is the initial waiting period of your employees before they become eligible for the group plan you choose for them. Most insurance companies will insist on a waiting period of at least thirty days before they will accept your new employee. You should ask the agent presenting the program if there may be a reduction in premiums if your waiting period is sixty days or longer.

Do you have one or more employees that have a chronic condition that would make them uninsurable on an individual plan or do any of your employees have dependents that might make them uninsurable? If the answer is yes, remember that this will drive up your premium due to the increased risk for the insurance company. However, too, a group plan may be the only alternative this employee has to obtain health insurance and you may or may not feel an obligation to help provide for this person.

If your company employs twenty or more people full time, your firm will fall under the health insurance rules of COBRA. COBRA is short of Consolidated Omnibus Budget Reconciliation Act (Federal Act). If you have employees that your company, you may be obligated to offer them extended coverage for their health plan. They would, of course, have to pay the premiums themselves but you, as the employer, will still be faced with the prospect of increased paper work just for record keeping, If you don’t already have a human resources department, will you have to create one in order to comply with this law? More on COBRA and other Department of Labor laws can be found at: http://www.dol.gov/ebsa/newsroom/fscobra.html.

What type of business do you have? Certain business types may have too large a risk factor for the insurance companies. Businesses such as asbestos and/or lead paint removal, commercial divers, crop dusters, dance halls, etc. may not be able to find health insurance at an affordable premium if they can find it at all. Many times, high risk businesses will find they must become self-insured.

In order to keep premiums at an affordable level for your employees, you may have to consider a plan that will cover your employees only and not their dependents. Usually, though, this will be an option for the employee to make on their own.

You will also have to decide what portion of the health insurance premium that you will pass on to your employees. Some plans may require that if fewer than, say, ten employees sign up for the plan it must be completely funded by the employer. Most often this is done on a percentage of employee enrollment basis. That is to say, if you have ten employees, for instance, there may be a requirement that at least fifty to seventy-five percent enroll in the program. Those that do not sign up will be required to sign a waiver of coverage form.

Will you offer your employees only a basic health plan or will you want to provide extras such as life, dental or short term disability? These extras will drive up the cost of your premium if you are paying 100% of the premiums. It may be better to offer these extras on a “cafeteria” type plan so that each employee can pick and choose which extras they want to pay for and you, as employer, will not be required to fund any of them.

Suppose you don’t want the hassle of administrating a group health plan, then how can you offer coverage to your employees? You may want to consider offering them individual plans fully funded by themselves and all you do is deduct the premium from their paychecks and send in a check to the insurance company once a month for your employees’ premiums. This is called “list billing”. Each employee would have to qualify for coverage on their own merits. Also, this is an attractive alternative to group health plans since each employee takes their insurance with them if they should leave your employment. This means, too, that you would have no concerns about COBRA compliance. Additionally, even part timers could get coverage for themselves.

If the premiums are extremely high or you don’t want to pay any portion of the premiums for them, you may want to consider an HRA (Health Reimbursement Arrangement) with a high deductible health plan to keep cost down. Another alternative would be to offer the same high deductible plan with an HSA (Health Savings Account). These are also a means of providing some health coverage for employees that have retired.

The final choice as to which type of plan you will offer is up to you, the employer. These are a few of the considerations you must make before you sign a contract for insurance. Each type of plan will come with options that will have to be considered as well. These options, if offered to your employees, may or may not increase your premium. One good thing in all of this—at least the premiums are generally guaranteed not to rise for at least twelve months. After a year you get to start all over again!