Group Benefits FAQ

We have answered many of the common FAQs about Group Benefit plans.

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What are the key points for a successful group benefits plan?
  • Build a Group Employee Benefit program whereby the employer pays 100% (except for LTD, where the employee pays 100% of the premium) of the plan.
  • The option for employers to pay 100% of premiums... This is helpful when renewal increases arise because it is often difficult for business owners to take premium increases to employees. When employers pay 100% of the premium, the employer is the one responsible for the increase and not the employees.
  • It's all about been informed for owner and employees, often they have no idea that the price changes year to year based on usage.
  • For some clients, to make group affordable, the plan may involve using large coinsurance’s e.g., 50% coinsurance on EHC or Dental (usually 80% with a $50 Single / $100 Family deductible)
  • The owner who is communicating that the plan is mandatory and part of their "total compensation package".
Which benefits do employees pay?
  • LTD is usually employee paid so the benefit is tax-free at time of claim.
  • Any additional amounts the employer wishes to pass on to the employee (assuming the LTD is not enough) can be either:
  • Paying 100% of the Life, AD&D, and Dependent Life and Critical illness benefits
  • A percentage of the EHC and Dental.
  • There is one school of thought that when employees pay EHC and Dental premiums…. their claims tend to be higher because they want their "investment" back (and more).
  • When there is EHC and Dental cost sharing, it is recommended that there are no co-insurances and no deductibles as employees feel "nickled and dimed".
Which benefits do employers pay?
  • The greater the contribution from the employer, the greater the chance of implementing a plan.
  • If the employer can pickup the cost of the EHC and Dental it will really go a long way to getting a plan in place.
  • Employers can pay the premiums for Life, ADD and STD (STD would then be taxable) with the Life premium charged to the employee as a taxable benefit, rather than have employees pay the premiums.
  • The employer offers health and dental benefits to all employees (and their families)
  • The employer offers to pay 100% of the single rate for ALL Employees,
  • Employees with families pay the difference between the single and family rate
  • If single = $50, and family = $150 then the employees with a family pays the $100 difference
Are there any tax issues to consider?

To maximize tax efficiency and to help with cost sharing ,the employees should pay for the life, AD+D, Dep Life, and LTD. This will ensure that life, AD+D, Dep life are not taxable benefits. With LTD, the employee would receive non-taxable benefit at the time of a claim.

What are the best ways to keep the cost down for new groups?
  • With the introduction of many specialty medications, and the rising overall cost of drugs in the marketplace, groups can always consider a drug cap (perhaps $2,000).
  • A drug cap allows for the majority of basic medications to be covered, however, it will cap out any high cost claims, or employees taking several medications that add up to more than the drug max.
  • The drug cap reduces the insurance company's risk significantly and there will be large reductions to the EHC premiums which will increase the affordability of a basic plan.
  • Having 80% co-insurance, a dispensing fee deductible on drugs (this is often overlooked), mandatory generic drugs, and combined paramedical maximums can all be nice cost containment features.
  • Once the plan is up and running it can always be enhanced over time as the company grows.

Take the Next Step

Contact a Scrivens insurance specialist to get started with developing the right plan for you.