Small Employers
2. Get Organized.
There are three things you can do to get organized before your shop for group health coverage:
1. Gather Your Information
Here’s a standard list of business data you’ll need to provide in order to purchase group coverage for your firm:
- Employer name. The legal name of your company.
- Address of your business. Insurers need the street address, not a P.O. Box, to determine your region or service area.
- A list of employees you plan to cover. It is possible that not all employees will be eligible.
- Tax identification or employer identification number. This is the EIN (sometimes called FEIN) you obtained from the IRS when you started your business.
- Business background. Depending on the size of your business, you may have to provide:
- date your business started - payroll records - Standard Industry Code (SIC or NAIC) informing the insurer what industry you’re in. - Quarterly salary and wages for the past two quarters. - Employee census information. Insurers use this to estimate the health care costs your group is likely to incur. A census does not include health status, race, religion, sexual orientation (even if applying for domestic partner benefits), Social Security number, or U.S. citizenship/immigration status. In order to quote you a rate, insurers will ask you to complete a census form for each of your employees with this information:
- name - age or date of birth - number of dependents - zip code. 2. Create a Schedule
You’ll need to finalize these scheduling details early in the process of shopping for an insurance plan:
- Effective date of coverage. This should be at least six weeks ahead so you’ll have time to complete the administrative steps, but no more than three months ahead so the quotes don’t expire. Most employers choose the first of the month to begin coverage.
- Plan cycle. Many plans operate on a calendar-year basis (January - December). Some plans operate on a different 12-month cycle, or your company may have specific busy seasons when you don’t want to deal with insurance issues.
3. Establish a Budget
You’ll need to figure out how much money you’re willing and able to spend for group coverage and then calculate the cost:
By percentage of payroll. Calculate an amount as a percentage of your total monthly and annual payroll.
Per employee per month. Calculate how much you could spend per employee per month. Determine a bottom-line maximum figure, without worrying about such variables as employee contributions or dependent coverage. Based on your budget, you can figure those variables later.
Consider cash-flow issues.
Think about how to allocate your cash reserves for health coverage.
- Monthly premium commitment. Most insurers require payment on the first day of the month covered. You would pay for April coverage on April 1, May coverage May 1, and so on. If you’re buying coverage for the first time or replacing existing coverage, the insurer will likely ask for a month’s premium in advance.
- Grace period. Most insurers offer a 30-day grace period on paying premiums. If you’re a few days late, your policy isn’t likely to be canceled. Ask about your insurer’s grace period and notification policy regarding cancellation.
- Cancellation/reinstatement. If you’re habitually late with payments, your insurer has the right to cancel your group insurance. Most insurers have their own procedures for reinstating canceled polices, so be sure to ask.
- Premium increases. Most premiums are renewed annually, which means the insurer can adjust the price once a year. Some plans allow insurers to increase premiums every six months. By law, you must be given at least 30 days’ notice of a proposed increase.
