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:

Staying within budget while providing key executives with the coverage they need—along with local staff on the same plan—is a challenge. This often results in annual premiums exceeding the budget.

Even structuring policies into different tiers with varying benefits, coverage areas, and limits isn’t always feasible with a single provider.

Unfortunately, many businesses opt for local providers with low limits, missing key features, and restricted coverage, leaving key executives without adequate protection.

Over the past decade, I’ve seen far too many business executives who are severely underinsured—unaware of the gap simply because they haven’t had to make a claim yet.

2. Separate Group Plan for Executives & Their Families

A separate group plan for executives and their families can meet their specific healthcare needs while optimizing 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 dividing the policy into two groups, you can align coverage with each group’s needs and budget while ensuring key executives receive adequate insurance.

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 Underwritte

If you have only a handful of key executives, a Fully Medically Underwritten group can offer a small discount, provided there are no pre-existing conditions. As your group expands, the group discount increases, making it a more cost-effective choice over time.

4. Allowance Method

If you have only a few key executives, another option is to let them choose private insurance, providing an allowance or covering the cost directly.

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.

While HR can handle obtaining quotes, work with an experienced broker who can help you navigate the details and make informed decisions.