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A good portion of Americans have health care coverage through a group insurance policy. Many receive this coverage as a benefit of their employment. However, most people are fairly unsure of what group insurance coverage actually is and how it works. A thorough understanding of this type of insurance can help people find the plans that work best for their individual and family needs, and it can be helpful when filing claims.
Without insurance coverage, it can be difficult to pay for medical expenses, whether or not they are expected. For many people, the job they choose is based on whether or not group health insurance is included. Employers who do not offer coverage can have a more difficult time attracting recruits and retaining employees. Want to know more about group health insurance and how it works? Read on for a thorough overview.
Sometimes known as “employer-based coverage” group health insurance is a type of insurance plan offered by a group or organization, often an employer, that helps members of the group pay for their health care. All members contribute to the plan, as well as the employer, to help reduce health care costs for every member. Because the risk to the insurer is distributed between several members of the group, the costs are usually significantly lower.
Group health insurance may cover a range of health care needs, including medical, vision or dental. Covered inclusions in a group plan will be determined by the employer, who will often communicate with their employees to make sure that their needs are met while still controlling costs. Businesses often work with insurance brokers to find the plan that best fits the majority of needs for their employees.
Group health insurance is only available for groups, not for individual families or persons. Employers select a plan, then offer it to their employee who may decide to participate or not. Most of the time, at least 70% of an organization’s employees must choose to participate in the group insurance plan for it to be valid. The employees who decide to participate can often select from among different types of coverages and add dependents or family members, with or without additional costs depending on the offering.
The cost of the plan’s premiums is shared between the employers and the company. Organizations determine how much they will contribute to their group’s plan, often based on their budget. Some companies may contribute more, lowering the cost for their employees, while others may not be able to put as much toward the premium, requiring that employees pay more.
In order to qualify for group health insurance, an employee must be on a participating employer’s payroll. Independent contractors and employees who are on unpaid leave are often not eligible for group coverage. Family members, including spouses and children up to age 26, are usually included in coverage, but this depends on the plan.
Businesses must also meet certain criteria to be able to offer group health insurance to their employees. They must have at least one full-time employee who works at least 30 hours per week, and they must pay payroll taxes. Business owners are not considered employees in this case and the one full-time employee must also not be the owner’s spouse, family member, partner, contractor or seasonal worker. Small businesses with fewer than 50 employees are not required to provide health care coverage, but any business with more than 50 employees is required to do so.
For employees, enrolling in a group health insurance plan may occur during a specific period. There are usually enrollment deadlines, so if a person doesn’t enroll in time, they may have to wait until the next open enrollment period. New employees can often enroll upon beginning their job, but there could be a waiting period of up to 90 days before the coverage officially kicks in.
During an organization’s open enrollment period, employees may be able to decide on additional supplemental coverage options or different tiers of coverage. Employees should consider whether adding extra coverage is the right move for themselves or their families, with many factors going into that decision, such as age, overall health and personal budget.
Companies can enroll in group health insurance coverage at any time and often work closely with insurance brokers to find the right plan that fits the needs of the majority of their employees. They must consider how much they as an organization can pay toward the premiums while offering their employees the best coverage possible.
Both businesses and their employees can benefit from group health insurance. Individual insurance plans may seem like a good idea, but they may not offer the same coverage that employees need.
The biggest benefit of group health insurance for employees is lower premiums. Individual insurance plans can cost significantly more per month than group plans, simply due to the distribution of risk between all members of the group. In addition, deductibles in group insurance plans are often much lower than in individual plans.
Group insurance plans can also provide better access to coverage options than individual plans at the same cost. In many cases, vision and dental coverage are provided as part of a group plan, while individual coverage may require participants to pay extra for these types of coverage.
Organizations can benefit from offering group health insurance as well, often through tax incentives. The money that employers put toward group insurance premiums is tax-deductible. Plus, small businesses can quality for tax credits just by offering health insurance for their employees. Offering group insurance can also help businesses attract and retain employees, saving businesses money in the long run.
Almost all group health insurance coverage is found through an employer. However, some employers do not provide this benefit and employees may have to look elsewhere. There are certain national organizations that provide coverage for their members, such as unions or AARP. Those who do not have group insurance or aren’t satisfied with the coverage their employers are currently providing may have to look elsewhere to find an organization that will allow them to participate in their group insurance plan.
Health care coverage is important, so don’t put off enrolling yourself or your business. If you have more questions about how to get started, contact Fringe Benefit Analysts today at any of our locations.
