Once small businesses grow past the mom-and-pop stage, employees often look to the company for greater health coverage. This puts employers in the difficult position of either spending a lot of money or potentially losing their best people. Gregory Good, a senior vice president in Marsh’s employee benefits practice, has advice for entrepreneurs faced with having to choose a small group health plan.

“The main considerations are cost and customer service. On the service side, work with your broker to see which insurance companies are the most user-friendly. On the cost side, there are a lot of variables, including the level of coverage and the age, sex, and resident ZIP codes of your employees.

“HMO plans are typically the least expensive health plans in Southern California. Often there are also preferred provider organization plans available, which are more expensive and are typically carried by the owners and key employees.

“Insurance companies will not deal with you directly. Your business insurance agent or workers compensation insurance broker should be able help you arrange a small group medical plan, but you can also use regional brokers.

“The rates for employers for fewer than 50 employees are filed with the state of California. Your agent or broker can access this information so you can make comparisons to get the best possible price.

“People worry about whether pre-existing medical conditions will be covered under their new plans. For the most part, state and federal laws make certain that pre-existing conditions are covered. For PPO plans, it can affect the price, but not generally more than 10 percent. There is no pre-existing condition limitation for HMO plans.

“Your employees should count on paying 20 percent to 25 percent of the premiums. It depends on how generous you want to be as an employer.

“Once you get your plan in place, the rates are guaranteed for a year. At the end of that period you’ll be told your renewal price, which is generally about 8 percent to 13 percent higher. It’s a good idea to shop your plan again if you are unhappy with the rate increase.

“Don’t worry too much if one of your employees has a large claim. The small group plans are pooled by the insurance companies, meaning that they are thrown in with hundreds, if not thousands of other group plans. One big claim shouldn’t have a significant effect on your rates.”