Group health insurance refers to insurance plans or policies purchased by the head of a large or small group, often an employer. It is then available to all qualifying members of the group. Most people know that buying health insurance privately is a highly expensive proposition. By buying a plan as a group, employers or associations can cut total costs and hopefully provide needed benefits to their employees or members. There isn’t always just group health insurance for large companies or associations; there are also plans available for small employers, usually defined as having less than 50 employees.
When group health insurance is purchased, it means that anyone choosing to buy it will get exactly the same plan from the company. Some very large companies may offer more than one plan, and these may have higher or lower levels of care. They may also offer different types of plans including HMOs, PPOs, and major medical. Employers often kick in part of the fees associated, though this may vary, as a benefit to employees. The insurance very frequently can be used not only for the employee but also to cover family members (spouses, domestic partners, or dependent children).
Usually employees get one chance a year to opt in to any group health insurance program, unless they are new to the company. The only chance they’ll typically have to add or drop coverage is if they marry or have children, which is often termed a “major change.” The next opportunity to get insurance would be at the next enrollment period, which is usually a year from the last one. Another mandate in the US is that insurance companies must continue to offer insurance for a few months if the employee loses a job, though this offered at a much higher rate.
The reason why group health insurance is typically less expensive than carrying insurance alone is because risk is spread, and larger groups mean less risk. If 1000 employees each participate in the same plan, chances are some will have major health issues and huge health expenses, but many others will have very few health problems and might never see a doctor. In a sense, the healthier people in the group are insuring themselves against huge medical costs in case they sick, but if they don’t, they help to provide these benefits for the people who do get ill.
Yet it’s sometimes the case that occupation translates to a higher risk of illness. This is why in the US, insurers have the right to refuse to carry a large group or dramatically raise their prices. This is not the case when small employers seek a group policy. They typically can’t be turned down according to federal law, but they may investigate health of the group up to six months prior to determining rates for the year.
Though group insurance has been a mainstay for many, problems have begun to arise from it. Insurers are charging higher prices and employees have seen increases in what they must pay for insurance at the same time there has been a downward trend in coverage. The fact that many people are paying more money for less coverage has led many to feel that healthcare reform of some kind is necessary.
