When it comes to providing health insurance for their employees, companies have two options: small group medical insurance or large group medical insurance. While both types of plans offer coverage for medical costs, there are some key differences in terms of the rates, coverage levels, and regulations employers need to be aware of. Let’s take a closer look at the differences between small and large-group medical insurance.
Small Group Plans vs. Large Group Plans
Small group plans are designed for businesses with 1-50 full-time equivalent (FTE) employees. Under the Affordable Care Act, any company offering a small group plan must provide plans for all full-time employees who are eligible for coverage. In addition, small groups must provide employees with a range of coverage tiers and face limits on how much they can charge employees based on age and tobacco use.
Large group plans are reserved for businesses with 51 or more FTEs—and generally come with fewer restrictions than small group plans. For example, while small groups must offer coverage to all eligible full-time employees, large groups do not have this requirement; they can choose which employees to cover and decide whether or not to cover part-time workers. Furthermore, large groups have more flexibility when setting rates—they can charge different rates based on factors such as employee age and family size—and also have more options when selecting plan designs.
Cost Differences Between Small & Large Group Insurance
The cost of medical insurance is an essential factor for employers when selecting a plan option. Generally speaking, premiums tend to be lower under large group plans than small group plans because larger companies often have more leverage when negotiating discounts from insurers due to their more significant number of members/employees enrolled in the plan. Additionally, since large groups typically don’t require every eligible employee to enroll in the plan, they may pay less overall because not everyone is registered in the plan at once—unlike small groups, which must insure all full-time workers who meet specific criteria regardless of enrollment numbers or if other workers opt out of coverage altogether.
When deciding which type of health care plan makes sense for your business—small or large—there are a few things you should consider: cost savings, regulations, and eligibility requirements. Ultimately, making this decision will depend on your company’s size and budget constraints but understanding these key differences between small and large group health insurance can help you make an informed decision about what kind of coverage best meets your needs.
ERB is the leading provider of insurance services in the Los Angeles area, with a team of experienced and knowledgeable professionals dedicated to providing an optimal level of coverage. We offer both small group and large group health plans from over 120 carriers, and have been doing so for more than 50 years. Our clients in the Los Angeles, CA area and beyond can rest assured we will always provide them with the most comprehensive and competitively-priced insurance services available.
