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  • The Internal Revenue Service (IRS) has responded to rising inflation by raising the contribution limits for health savings accounts (HSA). An HSA is a savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. Starting in 2024, individuals can allocate more funds towards their HSAs, offering a powerful way to save for medical expenses.

    What To Expect In 2024

    In 2024, the annual HSA contribution limit for self-only coverage will surge to $4,150, representing a remarkable seven percent increase from 2023. This means you can set aside even more money on a pre-tax basis, significantly boosting your health care savings potential. But that’s not all; for those with family coverage, the HSA contribution limit is increasing to $8,300 in 2024, a substantial rise from the previous limit of $7,750. This adjustment allows families to allocate more funds towards their health care expenses, ensuring comprehensive coverage and financial peace of mind. Additionally, individuals aged 55 and older can take advantage of being able to contribute an extra $1,000 to their HSAs.

    High-deductible health plans (HDHPs) are also subject to updates in 2024, ensuring a balance between affordability and comprehensive coverage. An HDHP is a plan with a higher deductible than a traditional insurance plan. The monthly premium is usually lower, but you pay more health care costs yourself before the insurance company starts to pay its share (your deductible). In 2024, HDHPs must have a minimum deductible of $1,600 for self-only coverage and $3,200 for family coverage. The annual out-of-pocket expense maximum cannot exceed $8,050 for self-only coverage in 2024 or $16,100 for family coverage, representing significant increases.

    What Employers Should Know

    Apart from individual benefits, the IRS has introduced updates that benefit employers as well. The IRS announced that in 2024, it will also raise the maximum amount employers may contribute to an excepted-benefit health reimbursement arrangement (HRA) to $2,100. An HRA is an account an employer can set up to reimburse employees for out-of-pocket health care expenses. This means you can provide your employees with even more financial support for their out-of-pocket health care costs. Show your team you care by offering enhanced benefits that truly make a difference.

    Boost Your Benefits For Your Team

    As we recognize the IRS’s boosts to HSA and HDHP limits in 2024, it’s important to remember that navigating these changes can be complex. As a business owner that has made it through unprecedented times, such as the COVID-19 pandemic and the intense labor market, you understand how important it is to stay ahead of the curve. This is where a professional employer organization (PEO) like GMS enters the picture to become a small business owner’s best friend.

    When you partner with GMS, you gain access to our comprehensive group health coverage plan that ensures compliance with the latest regulations and provides cost-effective solutions tailored to your unique needs. GMS represents more than 45,000 employees, which allows us to help small businesses purchase group health insurance for an average of a 24% lower cost for employee premiums and 21% lower for family premiums than the U.S. average.

    Allow us to guide you through these transformative times, empowering you to focus on what you do best – growing your business while securing the well-being of your employees. With GMS by your side, you can confidently embrace the future of health care and thrive in an ever-changing business landscape. Interested in learning more? Contact us today.

  • Health insurance is one of the most sought-after employee benefits, but not all health plans work the same way. There are several different types of group health insurance that differ in terms of how the insurance is purchased and how it affects the group’s premiums and plan options.  

    What Is Group Health Insurance? 

    Group health insurance is a type of health care coverage that’s provided to a group of individuals, typically employees of a company or members of an organization. This form of insurance means that all members of the group are covered under one policy. As opposed to individual insurance policies, where each person’s risk is assessed individually, group health insurance allows for the pooling of risk across all members. This often results in more favorable premium rates for the entire group. 

    One of the key advantages of group health insurance is that it can provide coverage for individuals who might otherwise struggle to obtain insurance on their own due to cost or pre-existing conditions. Employers or organizations purchase the policy and offer it to their members, often extending the coverage to include dependents. 

    Benefits Of Group Health Insurance

    Group health insurance offers numerous advantages for both employers and employees. For employers, it’s a powerful tool for attracting and retaining top talent, as it demonstrates a commitment to the well-being of the workforce. Employees benefit from lower premiums and better coverage options, often with pre-existing conditions covered. The buying power of a group ensures more comprehensive coverage at a reduced cost. In addition, group health insurance plans contribute to a healthier workplace, leading to a reduced absenteeism and increased productivity. Overall, it’s a win-win situation that fosters a supportive and healthy work environment. 

    Group Health Insurance Options

    While all these health plans have certain advantages and disadvantages, it’s up to you to decide which makes the most sense for your needs. Here are some of the common types of group health insurance options available for small businesses.

    Fully-Insured Plans

    Of all the types of group health insurance, the fully-insured plan is one of the more traditional options. Fully-insured plans involve the insurance company taking on the risks involved with healthcare costs and charging your business an annual premium for the benefits in the insurance policy, which is partially paid for by the employees. 

    The insurer uses a variety of factors used to calculate group health insurance premiums, including:

    • Size and health of the group
    • Average age of the group
    • The employer’s claims history
    • Types of occupation
    • Level of coverage and add-on benefits

    Self-Funded Plans

    While the insurance company covers the expense of employee health costs in a fully-insured plan, self-funding places that burden on the employer. This can often lead to more affordable rates and more control over a plan, with the tradeoff of your business accepting the risk of having to pay for any catastrophic claims. 

    This path is often seen as an option for large businesses, but small groups can also take advantage of self-funded plans. Small businesses can opt for a partially self-funded plan with stop-loss insurance. This option limits your risk so that you can still reap some of the benefits of self-funding without taking on the entire burden in case any catastrophic claims occur.

    Level-Funded Plans

    Unlike the more traditional plans with annual premiums, level-funded plans are based on a monthly payment rate. Insurance carriers will use census information to determine the amount your small group should pay. This rate is based on factors like claims allowances, fees, and stop-loss coverage premiums. Once the year is finished, the carrier will adjust the monthly level based on group performance.

    Health Maintenance Organization (HMO)

    An HMO is a group coverage setup where group members pay for specific health services through monthly premiums. Through an HMO, you’ll have access to a network of healthcare providers and locations, but services will be limited to those that fall under that network. This arrangement allows HMOs to be more affordable than other types of health insurance plans, although seeing any physicians or facilities not included in your HMO network can result in a group member having to foot the full bill.

    Preferred Provider Organization (PPO)

    PPO plans are like HMO plans, except with more flexibility. PPOs feature a network of healthcare providers and facilities, but group members have the option to go to physicians or locations without being completely on the hook for the entire bill. Instead, these visits will result in higher co-pays and additional service costs, giving members some more freedom than HMO plans.

    High-Deductible Health Plan (HDHP) with a Savings Option (HDHP/SO)

    An HDHP is based around lower premiums and higher deductibles for group members. This means that members with this type of healthcare insurance will have to pay more out-of-pocket before the plan pays for its share. The tradeoff, however, is that this route allows monthly premiums to be lower, making it a good group health insurance option for employees who don’t use many medical services. 

    In addition, HDHPs can be paired with savings options like a health savings account (HSA). These accounts allow members to make tax-free contributions to an account that can be used to pay for healthcare costs, ranging from copays to major medical services. The funds in these accounts rollover every year, making them a great retirement savings option, too.

    Health reimbursement accounts (HRAs) are another potential savings option that can be tied to an HDHP. These accounts are similar to HSAs, except employers make the contributions instead of employees.

    Choose the Right Type of Health Insurance for Your Small Business

    It can be difficult to find the right group health insurance plan for your budget. Balancing benefits administration and budget can be overwhelming for anyone without a strong grasp of the healthcare system. 

    That’s why many small business owners work with a Professional Employer Organization (PEO) to help weigh their group health insurance options and handle the administrative burden of healthcare coverage. Contact GMS today to talk to one of our experts about how we can help you offer quality healthcare plans that work with your budget.

  • While businesses with fewer than 50 full-time equivalent employees aren’t required to provide health insurance to employees, it can certainly be a good idea to do so. 95 percent of HR professionals named health care benefits as one of the most important benefits businesses can offer, making it a powerful tool to attract and retain top talent.

    It’s not always easy to decide the best path forward when it comes to weighing health insurance options. Here are four different factors you need to consider when comparing health insurance options for your business.

    A woman stacking health insurance options for a small business.

    Individual vs. Group Health Insurance Plans

    The first consideration you need to make is simple: do you offer health insurance or not? This scenario breaks down to whether you want employees to purchase health insurance for themselves or if you want to offer a group health insurance plan. 

    The difference between individual and group health plans

    While you may not need to offer health insurance, the Affordable Care Act (ACA) mandates that Americans have it. If you don’t offer health insurance, your employees will need to purchase an individual health insurance policy for them and their families. 

    A group health insurance plan allows businesses to provide coverage to a group of members, which is comprised of members of your organization and potentially their families. Businesses that do offer these plans must offer it to every full-time equivalent employee – you can’t pick and choose who gets coverage and who doesn’t. However, employees can choose to opt out to pursue an individual plan or join another plan if eligible.

    What makes the most sense for my business?

    This decision comes down to your employees and costs. While individual health insurance is the least costly route for employers, it comes with the caveat that nearly half of employees named health insurance as either a positive influence or the sole deciding factor in choosing their current job.  

    Meanwhile, group health insurance gives you and your employees benefits an individual plan would not. Individual plans have higher out-of-pocket limits. The Affordable Care Act caps these at $7,350, while individual limits could be as high as $10,000. In addition, the increased buying power of group plans can offer a higher-quality overall plan design than what you and your employees could get at the same cost in individual coverage.

    Some companies may be tempted to combat the lack of health insurance benefits by providing a bonus for employees to help pay their indiviual premiums. While this offers a level of financial support to employees, it is not viewed that way by other government and financial institutions and is strongly advised against. Group health plans allow employers and employees to pay premiums with pre-tax dollars. Anything spent on group healthcare costs is tax-deductible, whereas individual plans are not. 

    Another issue with individual plans is that renewals are typically high if you utilize the coverage at all. The size and health of a group affects health insurance premiums, potentially giving group health plans more stability than a plan built for one person or family. When you tie in the tax benefits, group plans often end up being more cost effective than individual plans, all while offering a key perk to new and existing employees. This makes group health plans a much more attractive long-term option for many small businesses.

    Plan Design

    Every health insurance plan can differ in terms of what is covered and you and your employees’ financial responsibilities for doctors’ visits and other medical costs. When comparing plan design, there are two different routes you can go: 

    • Traditional plans
    • High deductible health plans (HDHP)

    The differences between traditional and high deductible health plans

    A traditional plan operates on a system with copayments (also called copays) and deductibles. The plan helps you and your employees pay for doctor’s visits, prescriptions, and other in-network medical costs. Meanwhile, group members are responsible for paying any copays, coinsurance, and deductibles associated with your specific plan. Once an individual has met their deductible, that person is typically only responsible for coinsurance payments up to the listed out-of-pocket maximum.

    An HDHP also has deductibles, but no copays involved. With these plans, individuals must meet a higher deductible before insurance pays its share of in-network medical costs. However, HDHP plans are eligible for a health savings account (HSA). Employees can use an HSA to set aside money from their paychecks and pay medical costs with tax-free dollars. 

    What plan design makes the most sense for my business?

    Of the two options, most people are more familiar with traditional plans – HDHP designs are a newer design that started with the Affordable Care Act. Because of this, some employees may be more comfortable with traditional copay plans due to familiarity and the lower deductibles.

    While newer, HDHP designs open both employers and employees up to lower premiums and potential tax savings through the HSA. In fact, HDHPs are sometimes called HSA plans because of this particular advantage. Some employers even choose to contribute to employees’ HSAs – this gives employees some funds to pay medical bills while allowing employers to receive the tax benefit.

    Both plan designs offer certain advantages, so your decision comes down to costs and comfort level. People who are used to having copays will often prefer traditional plans. Meanwhile, others may realize the benefits of an HSA with some education around how HDHPs help them. Take some time to estimate how your employees would use the plan and what you and your employees need when it comes to healthcare coverage. 

    Health Insurance Network

    When comparing health insurance, you also need to weigh how much freedom you need when it comes to which facilities, providers, and suppliers are available to you and your employees. A health insurance network is the group of medical care providers that have a contract with your plan. There are three levels of health insurance networks:

    • Preferred provider organization (PPO)
    • Exclusive provider organization (EPO)
    • Health maintenance organization (HMO)

    The differences between PPO, EPO, and HMO networks

    A PPO network does not limit you in terms of medical facilities or caregivers as long as you’re with an in-network provider. In this type of network, you won’t need your primary care physician to refer you to another specialist or other provider outside of your network – you can simply go see that person for an additional out-of-network cost. 

    An EPO network adds some additional limitations to this process. A typical EPO may limit your group members to one major hospital network in your region, except in the case of an emergency. Essentially, that group of doctors negotiated a contract to be the exclusive providers for that network. As such, you’re limited to that hospital network and may need referrals to see outside providers. 

    An HMO network limits in-network care to a specific location. Some HMOs require employees to live or work in a certain service area for coverage and can range from specific hospitals to a broader circle of locations and providers. People with an HMO network will need referrals to see any specialists or other providers outside your primary care or emergency room needs. 

    What health insurance network makes the most sense for my business?

    Your choice of health insurance network comes down to desired flexibility and nationwide accessibility. PPOs offer the greatest amount of freedom in terms of access, whereas HMOs offer the least. An HMO may work for a small business where everyone is located in the same small area, but it’s likely not an option if your employees are spread out. 

    You also need to consider what happens if you ever leave a certain area. With an EPO or HMO, you may not have coverage options if you go on vacation or have college-age children in different areas. For that reason, PPO networks tend to be more popular with employees.

    Healthcare Administration

    If you do decide to offer health insurance, you’ll need to consider how to handle the benefits administration process. A business can turn to a broker for group health insurance or find an organization like a PEO that can manage both benefits and payroll administration.

    The difference between administrative options

    If you opt for a broker that can’t manage payroll, that will place the responsibility of benefits administration in your hands. This means that you or someone else at your company would need to administer your plan, handle adding new hires to the plan, and manage the renewal process.

    If an employer goes with a broker that also houses payroll, everything would be done for them and automated so that they didn’t have to administer the plan themselves. This type of relationship offers you full administrative management and support for new hires, compliance tracking, and reporting.

    What makes the most sense for my business?

    It depends on how much time and expertise you have. Benefits administration is a major endeavor for a small business. Not only do you need to oversee benefits administration, but also key aspects of payroll management for your small business. You can opt to hire someone internally to oversee these responsibilities, but that does require increasing payroll for administrative efforts.

    Meanwhile, an organization like a PEO is a natural fit for health insurance administration. A PEO can offer you greater buying power and educate employees about how your plan works, your network, and ways to keep premiums down. It also gives you and your employees experts to talk to whenever there’s a question.

    Ready to offer a competitive benefits package without taking on the administrative burden? Contact GMS today to find out how we can quality group health insurance at a lower cost.