Health & Disability Insurance

If you sponsor a health insurance plan for your employees, you may choose to hire a benefits administrator or health insurer to quote you a price for a group health plan.

A group health plan is subject to ERISA requirements, the federal law that protects employees' retirement plans and benefits.

Unfortunately, the costs of providing health insurance benefits are not pretty. Health insurance premiums for employer-sponsored plans rose 12.7% in 2002, the largest increase since 1990, according to a survey by the Kaiser Family Foundation (KFF) and Health Research and Educational Trust. Over the same period, the general rate of inflation rose 1.6%, the report said.

In Employee Health Benefits: "2001 Summary of Findings," the two non-profit organizations found that monthly health insurance premiums for single employees cost $255 and $633 for employees with families. Employees paid about 16% of the cost of single plans and 27% of the cost of family plans, the report said.

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Businesses with between three and 199 employees saw their employee health insurance costs rise 12.3% in 2002. Whether small businesses offer health insurance benefits appears to be related to the number of employees they have. Ninety-six percent of the surveyed businesses with 50 to 200 workers provided health benefits in 2002, while only 74% of those with 10 to 24 workers do. For businesses with fewer than 10 employees, only 55% of the surveyed firms provide health benefits.

Employers managed to increase cost sharing with employees by using co-payments and deductibles. However, they are fairly skeptical in being able to pass on to employees much of the increase in health care premiums. In fact, over the past five years, the percentage of premiums paid by employees have actually decreased, the report said.

The Pension and Welfare Benefits Administration (PWBA), a division of the U.S. Department of Labor (DOL), has substantial information at its Web site to help you ensure that your group health plan complies with federal health-benefit laws. The most notable of these laws are the Health Insurance Portability and Accountability Act (HIPAA) and Consolidated Omnibus Budget Reconciliation Act (COBRA).

The PWBA offers several examples of how a group health plan must comply with federal laws, including some of the following rules:

• Pre-existing condition exclusions. Group health plans are limited in their rules for excluding certain pre-existing conditions from benefit coverage.
  
  
• Start date of exclusion period. HIPAA require that any exclusions of pre-existing conditions begin on the date the employee enrolls in the program. Group health plan sponsors are prohibited from delaying the start date of any exclusion period.
  
  
• Special-enrollment provisions. Group health plans must allow employees, as well as new family members, to enroll in the plan upon marriage, birth, adoption, or placement for adoption. An employee who is otherwise eligible need not have already been enrolled at the time such an event occurs. Instead, a special-enrollment provision allows the employee to enroll immediately as a result of these special circumstances.

In addition to group health plan coverage, you may wish to provide disability insurance coverage for your employees. You can ask your benefits administrator to add this coverage as a policy rider to your group health plan. You may also ask your benefits administrator to provide accidental death & dismemberment (AD&D) coverage as a policy rider to your group health plan.

State governments administer workers' compensation programs. These insurance programs provide benefits to employees who are injured in the workplace. As employer, you pay into your state's worker's compensation fund. You can find information on state workers' compensation laws at the Web site of the Office of Workers' Compensation Programs (OWCP), another division of the Department of Labor.

The above information is educational and should not be interpreted as financial advice. For advice that is specific to your circumstances, you should consult a financial or tax adviser.