Understanding the History of Small Group Insurance
A bit of historic interest: Texas is considered by many to be the home of modern group health insurance. Though various forms of ‘insurance’ have been in existence since ancient times, it was in Dallas in 1929 that Justin Kimball implemented an idea that would help teachers pay their hospital maternity bills, which was, at that time, a problem of financial crisis proportion. This idea would also lay the foundation for group medical insurance.
Justin Kimball, a teacher turned university professor turned Baylor University Medical Center Vice President, had a simple idea. Dallas teachers who ‘opted in’ could pay $6.00 per year to cover themselves for any needed hospital maternity care they might incur in the future (after paying out of pocket for the first week of care, that is – in essence – the first ‘deductible’).
In anticipation of this possibility, 75% of Dallas’ teachers quickly signed up. Nearly 100 years later, health insurance is no longer a novel idea – it is a necessity. Today, there are various routes (and costs) to obtaining health care coverage. In Texas, group-based healthcare covers about half of the population. Small group coverage accounts for a large portion of this. So, what is small group insurance?
Small group insurance is an insurance policy purchased by a group of 2-50 people. A group is generally comprised of either the employees of a business or the members of a professional group or union. This is almost always considerably more affordable to the members of such a group than any individually purchased medical plan would be, for several reasons. Mainly because things cost less in bulk and because group members are part of a larger pool which incorporates less individual mitigating cost factors, such as age and pre-existing conditions. To quote an American Express advertising slogan, membership has its privileges.
Small Group Insurance Benefits: There are plenty to consider.
These, for most people, top the list:
- Though there may be rare exceptions, when a company provides health coverage for its full-time employees it must provide health coverage for all of its full-time employees. Thus, refusal of coverage and continuation of coverage issues are almost nonexistent.
- Similarly, if a company chooses to extend health coverage to its part-time employees, then all part-time employees have the option to participate.
- Through a company’s group insurance plan, participants are covered at the same cost to all other participants, whether or not they have a pre-existing condition.
- Through a company’s group insurance plan, an employee’s dependents are included for eligibility as well.
Depending on a company’s size and budget, it will generally pay, at least in part, its employees’ premiums. Where this isn’t feasible, premiums are still much less costly than those that would be paid for an individual plan.
Companies that offer their employees health insurance generally have a more motivated, more loyal and less stressed out workforce than companies that do not. Employees who are provided with a group health insurance plan also have a better sense of ‘worth’ to their employer, thus generating a higher corporate self-esteem.
Providing health coverage to your employees can also reap tax benefits. As regulations and laws seem to be in the midst of change, it’s best to speak directly with an insurance professional who can provide you with the latest available information and keep you updated.
My wife and I have an individual plan with Humana which is moving out of Texas next month. Is there any way we can get into a group health plan as my employer doesn’t offer any group plan.
Hi Raymond – you would need to either join an existing group plan from your Wife’s employer or form a new corporation (LLC, C corp, S corp or Partnership) with both you and your Wife as owners. If you go the corporation route, it needs to have legitimate revenues and expenses to work. We work with most every carrier in Texas, so I’ll be happy to review the situation if you call me at 713.822.5855.