Health Insurance for Business Executives

In our inaugural edition, we’ll look at how your organization can treat health insurance for your business executives.

No matter the size of your company, it’s critical to ensure your key executives are well covered by health insurance We’ll look at a few ways to handle this. 

1. Group Health Insurance Plan for All Employees

Offering a group health insurance plan that includes all employees is a straightforward and often cost-effective solution. Here’s why:

Benefits:

• Group Discounts: Insurance providers offer group discounts based on the total number of employees insured. This can range from small groups, getting 5% off to much larger groups getting up to 40% off said insurer’s individual premium.
• Medical Health Disregarded (MHD): With group plans, pre-existing conditions & waiting period are typically waived if the policy is MHD underwritten. This allows your key executives to get coverage & treatments for any pre-existing conditions they may have.
• Easy Policy Admin: By centralizing your plan into one group AND by having MHD underwriting, it makes policy administration & claims easier for you & your employees.

Main Drawback:

It’s hard to stay within budget while simultaneously insuring your key executives on the level of policy they need & expect AND have all your local staff on that same plan. That usually results in annual premiums that exceed budget.

Even if you structure your policy into different tiers, which had different benefits, coverage area, etc., it’s not easily attained with one provider.

Unfortunately, what frequently happens is a local provider is selected that has low limits, lack of key features, reduced coverage area & does not meet the needs of a key executive in any way.

In the last 10+ years, I see far too many business executives who are wildly underinsured & are not aware of it yet, as they’ve not had a claim to date.

2. Separate Group Plan for Executives & Their Families

A separate group plan tailored specifically for executives and their families can address their unique healthcare needs & help optimize your budget. Let’s say you have a group of key people:

• Owners/founders
• C-Level executives
• Senior Management
• and any of their family

Then look into doing a split group. 1) Executive Group Health Insurance 2) Local Staff policy.

By splitting the policy into two groups, you meet the needs & budget of each group respectively while making sure your key executives are not under-insured.

This style typically works if you have 10+ people as you’d gain the advantages of Medical Health Disregarded, though it’s possible at just 5 people, albeit expensive.

3. Small Group Fully Medically Underwritten

If you only have a handful of key executives, you could still look at doing a Fully Medically Underwritten group & get a small discount. This would be suggested if there are not any pre-existing conditions to consider. As your group grows, the group discount increases.

4. Allowance Method

The last option if you only have a few key executives is to simply let them get private insurance, give them an allowance or outright pay for it and let them choose what they want.

It would be a personal policy, that they own & could take with them even if they leave your organization (it’s never a bad thing to own your own policy!!!).

Your company could still get an invoice & pay for it. Or your executive could pay upfront and get reimbursed.

Whatever you decide to do, seek advice from a professional insurance broker who can walk you through your options & provide transparent advice.

While you can rely on HR people to do the leg work in obtaining quotes, do it from an experienced broker who can help you make sense of it all.