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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 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.
Small companies that want to provide health care coverage for their employees often choose to sign up for group health insurance, a lower-cost option that helps both employer and employee. Federal law guarantees qualified businesses the option to sign up for this type of insurance, also called small group insurance, if they choose to do so. In addition, plans that are ACA-compliant (Affordable Care Act) cannot deny coverage to small businesses based on the health of their employees.
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.
A plan that controls costs by requiring members to use providers and facilities within a local network with a primary care provider. This can be a lower-cost option, but it does limit the providers that members are able to visit.
A plan that provides a list of preferred providers that members should use for the lowest cost health care. Members can use providers that are not on the list, but their costs will likely be higher.
This type of group health insurance plan is the most cost effective, but it also has the most limits in regard to what providers members may visit. The coverage benefits will vary based on whether the member uses in-network or out-of-network providers.
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 coverage and add dependents or family members, with or without additional costs depending on the offering.
Unlike individual health insurance plans, group health insurance typically offers lower rates and better coverage. The insurer’s risk is spread across multiple participants, allowing for better premiums, which are also often split between the participating organization and its employees.
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.
According to the ACA, a small business is between one and 50 employees. As mentioned above, your small business must have at least one full-time employee who is not the owner or spouse to be eligible for group insurance. An employee is considered full time if he or she works at least 30 hours per week. 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.
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. According to Forbes, the average premium cost for individual plans was $440 per month compared to just $409 per month for a group plan.
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 small business 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 qualify 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.
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. We can help you determine which plan is right for you and your employees, and we can go through state-specific eligibility requirements to make sure everything is in place before you sign up.
