North Carolina Business & Group Health Insurance

Business Health Insurance Guidance Since 1996

My name is Sam Davis, and I’ve been an independent insurance agent since 1996. Through S J Davis & Associates, I help North Carolina business owners explore group health insurance, small business medical coverage, and employee benefit options.

Over the years, I’ve seen employer health insurance change considerably. Businesses today may have different arrangements to consider, including traditional fully insured group health plans, level-funded coverage, self-funded plans, and employer health reimbursement arrangements.

Whether you’re a small employer offering health insurance for the first time or an established business reviewing your existing employee benefits, I believe it’s important to understand what you’re purchasing, what it costs, and what responsibilities come with the coverage.

My office is based in Wilmington, but I work with insurance customers throughout North Carolina. When you contact S J Davis & Associates, you’re working directly with me.

Traditional Group Health Insurance for North Carolina Businesses

Traditional fully insured group health insurance is one of the most familiar ways for employers to provide medical coverage to their employees.

Under a fully insured group health plan, the employer purchases coverage from an insurance company. The employer and participating employees pay premiums, and the insurance company assumes responsibility for covered medical claims according to the policy.

What Employers Should Compare

• Monthly premiums and employer contributions.
• Employee payroll deductions.
• Deductibles and annual out-of-pocket maximums.
• Primary care and specialist copayments.
• Coinsurance for covered medical services.
• Prescription drug coverage.
• Physician and hospital networks.
• Spouse and dependent coverage.
• Employee eligibility and participation requirements.

Fully insured group medical coverage may appeal to employers who prefer an established insurance structure in which the carrier assumes covered medical claims risk.

Level-Funded Health Insurance Plans

Level-funded health insurance is an alternative to traditional fully insured group coverage that some qualifying North Carolina employers may want to evaluate.

A level-funded arrangement is a form of self-funded employer health plan. It combines several expenses into scheduled monthly payments.

How Level-Funded Plans Work

A typical level-funded arrangement includes:

• Claims Funding: Money allocated toward eligible employee medical claims.
• Administrative Expenses: Costs for claims processing, plan administration, and related services.
• Stop-Loss Insurance: Coverage designed to reimburse the employer for certain claims expenses exceeding contractual thresholds.

Potential Advantages of Level Funding

• Scheduled monthly funding amounts.
• Potentially competitive costs for qualifying groups.
• Possible claims surplus refunds or credits.
• Different available plan designs and provider networks.
• Stop-loss protection for certain large claims.

Important Considerations Before Choosing Level Funding

Level-funded plans are not identical to fully insured group health policies. Employers retain certain financial responsibilities under the arrangement.

Some level-funded plans use medical underwriting, which may affect eligibility and pricing.

Employers should carefully review stop-loss coverage, exclusions, claims run-out provisions, termination obligations, and renewal conditions.

Surplus refunds are not guaranteed, and a lower initial monthly payment does not necessarily mean lower long-term costs.

I encourage employers to compare the entire financial arrangement, not simply the monthly payment.

Health Reimbursement Arrangements for Employers

A Health Reimbursement Arrangement, commonly called an HRA, is an employer-funded benefit that reimburses eligible employees for qualifying healthcare expenses under a formal plan.

Depending on the type of HRA, eligible expenses may include individual health insurance premiums, deductibles, copayments, and other qualified medical expenses.

Different HRAs have different federal eligibility, reimbursement, administration, and tax requirements.

Individual Coverage HRA (ICHRA)

An Individual Coverage Health Reimbursement Arrangement, or ICHRA, allows employers to reimburse eligible employees for qualifying individual health insurance premiums and other permitted expenses.

An ICHRA is also referred to as a CHOICE Arrangement.

Instead of selecting one traditional group medical policy for a class of employees, the employer establishes a reimbursement arrangement and employees obtain qualifying individual health insurance coverage.

How an ICHRA Works

1. The employer establishes a compliant ICHRA plan.
2. The employer determines reimbursement allowances for eligible employees.
3. Employees obtain qualifying individual coverage or other permitted coverage.
4. Employees provide required proof of coverage and eligible expenses.
5. The employer reimburses qualifying expenses under the arrangement.

Potential Advantages of an ICHRA

• Employers can establish a defined reimbursement budget.
• Eligible employees can choose qualifying individual health coverage.
• There is no federal annual maximum employer contribution limit.
• Different permitted employee classes may receive different arrangements.
• It may provide flexibility for businesses with employees in different locations.

ICHRA and Marketplace Premium Tax Credits

An ICHRA can affect an employee’s eligibility for Affordable Care Act Marketplace premium tax credits.

If the ICHRA is considered affordable, an eligible employee generally cannot receive Marketplace premium tax credits.

If the ICHRA is unaffordable, an employee may be able to decline the arrangement and qualify for premium tax credits, depending on other eligibility rules.

Employees cannot receive ICHRA reimbursements and Marketplace premium tax credits for the same coverage period.

Employers should consider these rules carefully, especially when employees currently receive Marketplace financial assistance.

Qualified Small Employer HRA (QSEHRA)

A Qualified Small Employer Health Reimbursement Arrangement, or QSEHRA, is available to certain qualifying small employers that do not offer a group health plan.

Generally, an eligible employer must have fewer than 50 full-time employees, including full-time equivalents, and meet other federal requirements.

A QSEHRA allows eligible employees to receive reimbursements for qualifying medical expenses, including individual health insurance premiums, subject to federal annual limits.

Important QSEHRA Requirements

• The employer cannot offer a group health plan.
• Annual federal reimbursement limits apply.
• Employee eligibility and written notice requirements apply.
• Eligible expenses must be properly substantiated.
• Minimum essential coverage is generally required for tax-free reimbursements.
• QSEHRA benefits may affect Marketplace premium tax credits.

An unaffordable QSEHRA may allow an otherwise eligible employee to receive a reduced Marketplace premium tax credit after accounting for the QSEHRA benefit.

Other Health Reimbursement Options

Integrated HRAs

An integrated HRA generally works alongside qualifying employer group health coverage. Depending on the arrangement, it may reimburse eligible deductibles, copayments, coinsurance, or other qualified medical expenses.

Excepted Benefit HRAs

Certain employers offering qualifying traditional group health coverage may establish an Excepted Benefit HRA.

These arrangements have specific annual limits, eligibility rules, and restrictions on reimbursable expenses.

Not every HRA can reimburse individual health insurance premiums. The type of arrangement determines which expenses are permitted.

Self-Funded Group Health Insurance Plans

Under a self-funded health plan, the employer assumes direct responsibility for paying covered employee medical claims rather than transferring the full claims risk to an insurance company.

Employers may use a third-party administrator to process claims and stop-loss insurance to help manage certain large claims.

Self-funded plans may provide additional flexibility but also involve financial risk, administrative responsibilities, and compliance requirements.

Level-funded health plans are one type of self-funded arrangement.

HSA-Compatible Group Health Insurance Plans

Some employers may want to offer group health insurance designed to meet the requirements for Health Savings Account eligibility.

An HSA is an individually owned account that may receive eligible employee and employer contributions.

To contribute to an HSA, an individual generally must have qualifying high-deductible health plan coverage and meet other federal requirements.

HSA funds may be used for qualified medical expenses and generally remain with the individual after changing employers.

An HSA differs from an HRA because the HSA belongs to the individual, while an HRA is an employer-funded benefit.

Comparing Business Health Insurance Options

How Much Does Small Business Health Insurance Cost in North Carolina?

The cost of business health insurance depends on several factors, including the type of coverage, employee ages, group size, plan benefits, geographic rating area, and applicable underwriting or rating requirements.

Fully insured plans are priced differently from level-funded arrangements. ICHRA and QSEHRA programs involve employer reimbursement allowances rather than traditional group insurance premiums.

When comparing options, employers should review:

• Employer monthly costs.
• Employee contributions.
• Deductibles and out-of-pocket expenses.
• Doctor and hospital networks.
• Prescription drug benefits.
• Spouse and dependent coverage.
• Employee eligibility requirements.
• Renewal costs and contract provisions.

Reviewing Your Existing Group Health Insurance

If your business already provides employee health insurance, the annual renewal period is a good opportunity to review your coverage.

Employers may want to compare premiums, benefit changes, provider networks, employee contributions, and other available coverage arrangements.

A lower premium does not necessarily mean better coverage. Changes in deductibles, networks, prescription benefits, or financial responsibilities should be considered.

Additional Employee Benefits for North Carolina Businesses

In addition to group medical insurance, employers may want to explore other employee benefits.

• Group dental insurance.
• Employee vision insurance.
• Group life insurance.
• Available supplemental and voluntary benefits.

Benefit availability depends on the carrier, employer eligibility, and selected plan.

Learn more about Dental & Vision Insurance .

Frequently Asked Questions About Business Health Insurance

How many employees do I need for group health insurance?

Eligibility depends on the type of coverage and applicable insurance rules. Some qualifying small businesses with only a few employees may be eligible for group coverage.

Are level-funded health plans always less expensive?

No. Some qualifying businesses may find competitive level-funded options, but pricing, underwriting, benefits, claims risk, and renewal terms vary.

Can employers help employees purchase individual health insurance?

Certain qualifying employers may establish an ICHRA or QSEHRA to reimburse eligible individual health insurance expenses. These arrangements have specific federal requirements.

Can employees choose their own health insurance with an ICHRA?

Yes. Eligible employees can select qualifying individual health insurance coverage and receive reimbursements under the employer’s ICHRA arrangement.

Can an employer contribute to an employee’s HSA?

Employers may contribute to eligible employees’ Health Savings Accounts, subject to applicable federal requirements and contribution limits.

What information is needed for a group health insurance quote?

Employers may need to provide their business location, employee count, employee ages, desired effective date, existing coverage, and contribution preferences.

Insurance coverage, eligibility, premiums, underwriting, participation requirements, and benefits vary by carrier and arrangement. Level-funded and self-funded plans involve different financial responsibilities from fully insured coverage. Health reimbursement arrangements are subject to federal eligibility, tax, and administrative requirements. Information is provided for general educational purposes and does not constitute tax or legal advice. Contact S J Davis & Associates to discuss available insurance options.