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Group Health Insurance, Explained

  • Employee Benefits
  • Article
  • 6 min. Read
  • Last Updated: 06/09/2017

group health insurance basics
Major medical insurance isn't just nice to have these days. It's a necessity. Let's break down the basics of group health insurance, and how you can use these offerings to retain your best workers.

Table of Contents

Myriad changes in the health insurance market have more Americans, particularly business owners, focused on finding the right group coverage while managing costs. In current times, major medical insurance isn’t just a nice-to-have: it’s a necessity.

Providing group health insurance can give you an edge over other businesses vying for your recruits. A nationwide survey conducted by Paychex looked at the impact of benefits on employee retention. Forty-four percent of employees stated they would leave their current employer due to a lack of benefits. Furthermore, affordable health insurance ranked first when asked which benefits would entice employees to stay at their current job. Let’s look at how you can utilize health insurance offerings to retain your best workers.

employees ranked affordable health insurance #1 - Paychex survey

What is group insurance?

Group insurance plans cover groups of two or more people — typically an employer, two or more employees, and their families. Group insurance is a particularly effective option for helping businesses attract qualified job candidates and reduce employee turnover. Despite initial fears of a negative impact of the Affordable Care Act (ACA), more businesses have added group coverage than ever before.

What coverage is included in group insurance?

Depending on the needs of the business, its employees, and the offerings of the carrier, group insurance plans can include a range of coverage including, but not limited to, medical, dental, vision, life, and long- and short-term disability insurance. Group insurance typically does not refer to coverages a business owner would have to protect themselves, their business, and their property – commonly referred to as property and casualty insurance.

How does group insurance benefit small businesses?

Unlike individual insurance, where employees pay separately for 100 percent of their own premiums, group insurance allows employers and employees to share the costs, with employers covering some part of the premium cost for a single employee or dependents. Businesses that offer group health insurance may also be eligible for federal and state tax credits, depending on their size and situation.

Should you choose group or individual health insurance?

Unless you are the only employee at your business, the pertinent question is whether you should choose an individual or group health plan. While group insurance is an effective, and in many cases, less-expensive option for many small businesses, in some cases individual insurance may be the better choice. By reviewing your situation and options with a licensed insurance agent, you can determine which type of insurance is the best choice for you and your business.

How much coverage do you need?

With many different types of group insurance offered through different carriers, it can be difficult to know exactly which plan will help ensure that you and your employees have the appropriate coverage. Take your business size, location, industry, and more into account to help you understand the coverage you need, and how to get it.

What is the minimum number of employees required to participate in a group insurance plan?

In general, the necessary percentage of participating employees becomes lower with increasing business size, but specific group insurance participation requirements vary by state and carrier.

What are the steps for getting a group insurance quote?

There are many time-consuming, complex tasks that must be done right to select the right group insurance plan and keep it running smoothly:

  • Research carriers in your area
  • Select plan offerings
  • Obtain quotes
  • Compare the results to find coverage that fits your needs and budget
  • Manage employee enrollment, from submitting application forms to the carrier, to enrolling employees, and setting up payroll deductions
  • Continuously coordinate with employees and your carrier to stay on top of enrollment changes, remove terminated employees from coverage, and track eligibility of new hires
  • Maintain regular communication with employees at different stages of the plan year, including notifying them of open enrollment and providing enrollment assistance
  • Make premium payments on time, stay compliant with IRS regulations, and set up and administer a COBRA or state continuation program for employees who have lost coverage

Insurance quotes are complicated

Obtaining the necessary quotes, enrolling employees, and monitoring the plans can be time-consuming and extremely complex. Doing it yourself could result in costly errors or oversights that prevent you from getting the right coverage at the right price while staying in compliance with the law. A full-service, experienced employee benefits agency can dedicate time and expertise to your situation, so you can take the guesswork out of finding and administering a group health plan.


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A group health insurance policy makes sense now more than ever. Simplify group health plan management with Paychex. 

* This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date.

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