Choosing between small group and large group health insurance plans is an important decision for businesses of all sizes. Each option offers unique advantages, from tailored coverage for smaller teams to cost efficiencies for larger organizations.
What Is the Difference Between Small Group vs. Large Group Health Insurance Plans?
A small business has anywhere between 2 to 50 employees, depending on the state you’re in. A large business is going to have 50+ employees.
There are many various factors to go in here. The look-back period typically considers the previous calendar year—for example, in 2024, you would review your employee count from 2023. If your business had a full-time equivalent employee count of 50 or more in 2023, that classification would affect your insurance requirements for the following year.
So now, going into 2025, we’ll look back on 2024 to see if you’re a small group or a large group.
Small Group vs. Large Group Coverage & Plan Customizations
If you’re under 50 employees, it will be pretty tough to customize the exact plan you would like to see. Today, more than ever, with these small businesses, we can customize those plans for you as best as we can, utilizing the level select plans and some semi-self-funded plans.
When you’re business has 50+ employees, we could customize it even more by matching exactly what you have right now, showing you apples to apples and potential savings on your monthly premium.
ACA Guidelines for Small Groups & Large Groups
If you’re a small group or large group, you must comply with the ACA guidelines.
- Large Groups: If you’re a large group, you’re required to offer health insurance for all your employees. If you do not offer health insurance for your employees, then you may incur a $22,000 penalty per employee.
- Unaffordability Penalty: If the plan is unaffordable for your employees and they go on the exchange, then there is a penalty if it’s unaffordable as well, and that could come back to bite you.
It’s important to follow the ACA guidelines. For small businesses, all filings must be completed according to the ACA. This means your employees must receive the filing, and as an employer, you must report all the filings as well.
Costs Comparisons Between Small Group & Large Group Plans
- Small Group Plans: Small group plans don’t require underwriting. We can generate a quote instantly—just give Cosmo a call, and we’ll get your quote within five minutes for a small group.
- Large Group Plans: Large group plans must undergo underwriting. Costs are often based on your company’s claims history or demographics.
Today, more than ever, we have options for small groups that are treated as if they are large groups, which is amazing. We’re able to get written quotes for small groups. For example, if you have five-plus employees enrolled in the state of New Jersey, there’s a lot of opportunity for your company to save big on health insurance.
Risk Pooling for Small Groups vs. Large Groups
- Small Group Risk: When you are a small group, there is zero risk. For example, if I have a company with 30 employees enrolled and 40 on payroll, and I’m on a small group fully insured plan, even if there are millions of dollars in claims, it’s not going to affect my renewal at all.
- Large Group Risk: However, if I am a large group and there are millions of dollars in claims, yes, I might see some significant increases. As a broker, you have to be creative to minimize those increases for large group plans.
How Do Employer Contributions Vary Between Small Group & Large Group Insurance Plans?
Obviously, the larger group probably has a higher contribution, but really it shouldn’t make a difference between the small group and the large group insurance.
Contributions are based on benchmarking. We benchmark your company. For example, if you’re a manufacturer, a professional, or in any other industry, we benchmark to see what your competitors are offering.
You want to know what your competitors are offering so you can stay in line with them and avoid losing employees. That’s really the most important factor when it comes to employer contributions.
Find Out Which Health Insurance Plan Is Best for Your Business
If you’re unsure whether a small group or large group health insurance plan would be better for your business, Cosmo Insurance Agency can help. Contact us today to speak with a broker about the most suitable healthcare benefits package for your employees.
