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Buying group health insurance; the online experience

Only recently have several new websites begun to offer online health insurance quotes and applications for businesses looking for small-group health insurance. From benefits advice geared toward small businesses through "benefit portals" to a straightforward health insurance quote, there's an insurance website to meet the needs of nearly any small business owner.

Online services vary depending on the website; some sites provide referrals to local insurance agents, while others act as your insurance broker. For instance, Firstdoor.com offers "a one-stop solution for the employee benefits and human resource management needs of small businesses," according to the website's homepage.

"Our sweet spot is around the 20-person company," says Billy Dukes, marketing director at Firstdoor.com, who provides insight into who their small-business customers are. "They're big enough to where they have to deal with issues of employee management and benefits, but small enough that they don't have one person dedicated to human resources decision-making. We try to create the knowledge and tools that can help them make a better insurance decision."

You can select quotes based on deductibles and other plan features before you ever contact a broker.

Can online services help small businesses save money?

The cost of insurance is strictly regulated by states, so small businesses may not find a better deal online. Additionally, small business owners still need to interact with brokers and submit the appropriate paperwork before small-group health insurance plans can be purchased.

However, these web-based services provide the benefits of convenience and time savings by allowing business owners to conveniently submit their applications online. Another advantage of purchasing small-group health insurance online is being able to compare different features before working with a broker. This gives you the opportunity to choose the health plan criteria you want to use--deductibles, price, coverage or other features--to make your final insurance plan selection.

You can further define what you want in a health insurance plan by asking yourself the following questions:

  • Should the plan include dental insurance, maternity coverage or the cost of prescriptions?
  • What should the deductible be for a hospital stay?
  • How much of the premium will the business pay and how much will the employee pay?

Added features usually increase the cost of premiums, so knowing what you want beforehand can facilitate the application process and receipt of your preliminary online quote.

Completing an application and receiving a quote online

To secure a preliminary online health insurance quote, complete an online application, entering the following basic company and employee information:

  • Your name
  • Company address
  • Company business--either the Standard Industry Classification (SIC) code or a brief description
  • Number of employees to be covered

For each employee, you'll also include:

  • Name
  • Gender
  • Age or birthday (depending on the site requirement)
  • Whether a spouse and/or dependent will be covered

Depending on the type of insurance site you've chosen, you will receive either a referral to a broker in your area, or, if the site is acting as the broker, online quotes for different plans. One online site, eHealthInsurance.com, provides instant health insurance quotes once you've submitted your online application. If one of their plans meets your criteria and price point, you send an email to the site and begin the formal application process.

What happens next depends on the site you visit, and whether it acts as a broker, or refers you to a broker in your area.

The application, which is the same one you would complete if you were sitting in a broker's office, requires health or medical histories for each employee, as well as their covered dependents, and wage and tax information to determine the final insurance premium rates.

Some sites, such as BenefitMall.com, refer you to a broker in your area while others like Firstdoor.com allow different brokers to bid for your business. The stated goal of Firstdoor.com is to "help businesses make a better buying decision" says Dukes. "We're agnostic when it comes to whether a small business buys insurance from a carrier directly, from our marketplace, or through traditional channels. They can take our information to their broker and reaffirm what we've told them."

Evaluating the online health insurance experience

In June 2000, when online insurance was still in its infancy, the California HealthCare Foundation (CHCF) published a report about the value of purchasing insurance online for individuals and small businesses (2-50 employees). The report, "Health Insurance: Purchasing and Privacy Online for Individuals and Small Groups," explored two online broker sites--eHealthInsurance and HealthAxis.

The report found that the sites "demonstrated clear value to customers," although there was "room for improvement in site capabilities and site privacy policies and practices." The CHCF report concluded, however, that there is no evidence to suggest that the confidentiality of the private information of employees is compromised when you purchase insurance online.

"When you're taking your information online, where does it go?" asks CHCF program director, Marian Mulkey. "That can be made more transparent, though it's not clear that any more privacy risk exists online than through traditional channels."

The CHCF report also found that "some sites offer a full range of products (e.g., HMO, PPO) for each health plan they offer; others are more restrictive in the product choices they present." Some states, such as California, offer many different health plan options online, whereas other states, like Alaska, offer fewer options.

Check for insurance options in your state before you begin the online application process. At this time, there's no easy way to compare individual health plan quotes, so you may have to compare them yourself.

Whether or not you feel comfortable purchasing insurance online is a matter of personal preference, says Mulkey. "Some people prefer to shop for insurance on their own time frame. Online, you can shop on your own."

Whether you choose an insurance website that refers you to a broker or one that acts as your insurance broker, small businesses now have more ways to shop for small group health insurance than ever before.

Continue to How to choose an agent or broker for group health insurance.

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