Benefits for the Small Group

Small group insurance is defined as group insurance for businesses with less than 51 employees eligible to participate in the benefit program. For example, an employer may define an eligible employee as an employee working 30 or more hours per week. If the employer has less than 51 employee on payroll meeting that eligibility requirement, the employer is considered a small group employer.

The primary advantage of small group insurance is the guaranteed issue provision. Small group insurance is regulated to ensure that small businesses cannot be denied group insurance. A small group employer cannot be declined group insurance based on the health of the workforce or past claim/utilization experience.

Within the small group marketplace, insurance carriers assign each small group a Risk Adjustment Factor (RAF) based on the size of the company and the general health of the workforce. The standard RAF is a 1.0. Insurance carriers may “discount” groups down to a .90 RAF if the group is desirable (young, healthy, and larger) and likewise may increase the RAF to a 1.1 for groups that are deemed to be more of a risk (older, current or past health problems, or under 5 enrolling employees). As a result of regulation, small groups cannot be declined group insurance and there is little creativity in terms of rating.

In small group, the price is the price regardless of which broker a small group employer chooses to work with, and even whether the employer chooses to work with a broker or not. The value of a broker comes with creativity, experience and service. A good small group broker can provide value by understanding clients' needs, employee population and budget and then analyzing an ever-changing marketplace to ensure the small group client receives the best benefits at the best price. Small group employers typically have a greater need for education and training as back-office employees may perform multiple roles.

Benefaction understands the unique needs of the small group employer. We listen to you and complete a competitive market analysis that considers all of the insurance products available in the marketplace. Then we customize a program to meet your benefit and financial needs. In addition, we provide full training and support to the small group employer HR staff to ensure you understand your benefit program and have the tools necessary to efficiently manage the program.