Finding the Right Group Insurance Plan for Your Small Business

Health Care Spending Account
Experience Rate Plan
Pooled Plan
Pay for use

Simple. A word not many have used to describe group insurance. As consultants, it’s our job to make benefits as easy as possible, so you can worry about running and growing a business. However, it does help to be informed on the basics of plans so you can make the absolutely right decision for your small business.

What Makes Group Insurance Different?

Group insurance is like buying at the store vs. buying in bulk. Insurers provide a much better deal when more people are signed on to their insurance. So even if your small business only has three, two, or even one employee, group insurance will pool you with other businesses and give you a much better rate.

Benefits of Benefits:

  • Attracting and retaining the best employees
  • Less absenteeism and more employee engagement
  • Tax-deductible in many cases

There are many different plan options you can get with your group insurance. Here’s a few pros and cons to weigh while you’re making your decision.

Spending Account Plans (Health Care Spending Account)

How it Works:

It’s like a bank account, but for benefits. The employer allocates a certain amount for employees to use on the coverage of their choosing.


  • Provides autonomy and flexibility for employees
  • Employees get help with only the benefits they need – great for diverse workplaces
  • You can reward seniority with more/less benefits
  • Fixed annual cost, with manageable rate increases


  • This style of plan doesn’t cover catastrophic health needs
  • Can be restrictive of employees needs
  • Usually requires employee to pay out of pocket, and be reimbursed later.

The Experience Rates Plans

How it Works:

The employer of a single workplace pays a monthly premium based on claims of the previous year. The insurer covers all claims from the employee based on the plan design limitations set in place by the employer.


  • This is a competitive area of insurance, which means competitive rates
  • A fairly healthy workplace can have low annual premiums
  • High claims are usually covered


  • Some employees may not benefit from the full-range of support offered
  • Rates can increase based on claims of the previous year
  • This means rates can change dramatically year to year
  • Insurer keeps any surplus

The Pooled Plan

How it Works:

Much like the above plan, an employer will pay and annual premium based on the previous year claims, while the insurer pay all claims. However, the insurer brings together several groups, and the annual premium is based on the claims for the entire group.


  • Results in a larger group of people being insured which could mean lower rates
  • High claims are usually covered
  • Annual rate increases are more stable, do to the larger number of people insured


  • Less control over claims and cost, because claims from all groups contribute to rate increases
  • Claim information may not be disclosed in some cases

The Pay-for-Use Plan

How it Works:

Employer self-funds all health,vision and dental claims, while paying a premium on life and disability insurance. Employer also purchases any catastrophic insurance.


  • Employer has a lot of flexibility in what they can cover for employees
  • This style of plan usually has lowest rates
  • This style of plan has protection for High cost claims, so you don’t need to worry about breaking the bank


  • Paying all health and dental claims can result in unpredictable spending month to month
  • Employer assumes risk of most health and dental claims

Feel free to consult this infographic if you ever need clarification. Also feel free to reach out to us anytime and we can explain the differences of each plan. Each business is different and will benefit from group benefits in a different way!  

group insurance types overview

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