GROUP HEALTH INSURANCE

Buying Group Health Insurance Online

Small businesses are the perfect online insurance customer: wired and Internet-savvy. But only recently have 20 million American small businesses gotten the online attention they deserve, with several new Web sites offering online quotes and applications for small-group health insurance.

Some sites act as brokers, while others put you in touch with a broker in your area. Site features run the gamut, from bare-bones quoting services offering no insurance advice, to sites that bill themselves as "benefit portals," and provide reams of small-business benefits advice.

"Our sweet spot is around the 20-person company," says Billy Dukes, marketing director at the benefits site Firstdoor.com, with a home page that states it provides "a one-stop solution for the employee benefits and human resource management needs of small businesses." "They're big enough to where they're having to deal with the 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," Dukes says.

Making it Work For You

At health insurance sites, the small employer can obtain an aggregation of group health quotes. You can select quotes based on deductibles and other plan features before you ever contact a broker.

Buying a health plan online, however, doesn't offer a better deal on premiums, because of strict state regulations regarding premium levels. And it's hardly a miracle of one-stop shopping. While consumers can bind car insurance online within minutes, small businesses confront an online-application process that requires the same amount of work as visiting a broker in person. When buying a health plan online, you still must interact with a broker before purchasing the final product.

Obtaining a price quote, however, is fairly straightforward. Your quote is based on basic company and employee information. First, you'll need to fill out your name, the company's address, your line of business — either with a Standard Industry Classification (SIC) code, or with a descriptive keyword — and how many employees will be covered.

Next, you'll enter an employee census: name, gender, and age of each employee. (Some sites ask for specific birth dates, others for ages.) For each employee, you'll need to know whether a spouse or children will be covered under the plan.

The next step lets you outline plan requirements: Do you want maternity coverage? Dental insurance? Deductibles for hospital stays? These add-ons increase the cost, so it's best to know what you want before you apply for a quote. Also know how much of the premium you will pay, and how much will be paid by your employees.

That's it — you've applied for a preliminary rate quote. Now you'll be asked how you want to compare the plans that meet your criteria — by price, deductible, or plan features. 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.

Sites such as eHealthInsurance and Quotesmith provide instant quotes on various health plans. If you like what you see, you can move to the application process by sending an e-mailed request to the site. From there, you'll need to go through the same application process as if you were inside the office of an offline agent, supplying health histories of employees and any covered family members, and providing wage and tax forms in order to receive your final premium rate.

Other sites, including BenefitMall and Firstdoor.com, will refer you to a broker. BenefitMall refers you to a broker in your area, while Firstdoor allows brokers to bid for your business in its online "marketplace."

"We're agnostic when it comes to whether a small business buys insurance from a carrier directly, from our marketplace, or through traditional channels," says Dukes of Firstdoor. "Our goal is to help businesses make a better buying decision. They can take our information to their broker and reaffirm what we've told them."

Too early for a report card?

The California HealthCare Foundation's (CHCF) recent report titled Health Insurance: Purchasing and Privacy Online for Individuals and Small Groups, offers a snapshot of site features and performance for three online health insurance sites: eHealthInsurance, HealthAxis, and Quotesmith. The report warns that it may be too early to draw conclusions about such a young marketplace, and raises issues of concern to consumers using the sites.

CHCF found that buying health insurance online means being faced with a limited range of product choices. "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," the study notes.

And so far, there's no apples-to-apples way to compare quoted health plans, or even to make clear your preferences for deductibles, co-payments, and other important plan features. Before you start the application process, make sure you know what plans and insurance companies a site can offer in your state. Pickings can be slim, depending on your location. For instance, consumers in California, the largest insurance market in the country, have many more health plan options than Alaska residents, who might have only one or two choices.

The CHCF report's most intriguing question is that of consumer privacy in online health plan applications. To obtain a quote, you must enter health data for all of your employees. That's important private data to you, and represents a potential gold mine for the site.

Fortunately, the CHCF study found that although privacy policies could be better explained at the sites in question, there is no evidence that your private information is anything but confidential.

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

Overall, though, online health insurance sites can be a benefit to independent-minded small businesses and individuals, Mulkey says. "For some people, it's a personal preference. Some people prefer to shop for insurance on their own time frame. Online, you can shop on your own," Mulkey says.