Group Health Insurance

Group health insurance policies provide companies and groups with the opportunity to purchase an umbrella healthcare policy that can provide comprehensive healthcare services to employees or group members.

Group health insurance plans are overseen by the group’s administration but provide individual medical services to all enrolled group members. The most popular types of group health insurance policies are those held by private companies for their employees. In fact, more than 155 million Americans receive health insurance coverage through a group policy managed by their employer than from any other type of health insurance program. Many private and public groups also offer access to a group health insurance policy, including workers’ unions, credit unions and local community groups. Group healthcare plans must follow the same regulations set out in the Affordable Care Act (ACA) of 2014 concerning minimum medical coverage and maximum costs for policyholders like individual comprehensive health insurance policies.

ACA regulations treat small and large companies differently when it comes to whether an employer is required to offer its employees healthcare insurance and what extent of coverage must be included in the plan. Eligibility requirements for different group health insurance plans vary from plan to plan as well. Group health insurance policies are so popular because they are often able to offer people some of the most affordable insurance options available on the market today. This is largely because the insurance provider can spread out costs for “risky” policyholders with premiums from lower risk policyholders in the group, lowering the average amount paid by all policyholders. Group health plans are usually partially subsidized by the employer or group managing the plan, saving group members significantly on out-of-pocket costs. To decide if a group health insurance policy is right for your needs, it is a good idea to familiarize yourself with the details of all insurance policies available to you and compare policies to see which plan can give you the most medical coverage for the best price. Read on for more information abut how most group insurance policies work and how to decide if a group healthcare policy is in your best interests.

How Group Health Insurance Plans Work

Group insurance plans enable companies and groups to purchase a single umbrella healthcare policy to provide medical coverage for multiple group members. The group manages the policy and negotiates its terms with the insurance provider, while the group member or policyholder simply decides to opt in to the policy or opt out of its coverage. While employer-based group insurance plans are by far the most common in the U.S., several types of groups offer members access to affordable and comprehensive medical coverage under an umbrella plan. If your employer does not offer medical coverage or a plan that meets your needs, think about any professional or educational membership organizations or groups that you may already be part of and that may offer group members access to health coverage. If not already a member, you can look into joining worker’s unions, professional organizations, alumni groups and the like for access to their group insurance plan. Some popular membership organizations that offer members access to affordable and comprehensive health insurance include:

  • AARP Health.
  • Affiliated Workers Association (AWA).
  • Alliance for Affordable Services.
  • Association for Computing Machinery.
  • Costco Health Insurance.
  • Freelancers Union.
  • National Association for the Self Employed.
  • Writers Guild of America.

The basics of a group insurance policy are the same as they are for other types of individual health insurance plans, like having to meet the ACA’s minimum standards of care. While almost any employer or group can purchase a group insurance policy to offer employees, only some businesses are required to offer employees insurance. According to the ACA, all large employers must offer affordable, comprehensive health insurance options to their full-time staff, including any employees working 30 or more hours a week. Most states refer to small companies as those with 50 or less employees and large groups as those with more than 50 members.

The ACA makes no specific health insurance requirements for small businesses, even though they make up a large amount of businesses in the United States. Companies that choose to offer small group insurance plans to their workforce can receive the benefits of a group health plan even if only enrolling a handful of people. In fact, some states allow self-employed individuals to apply for a small group health insurance plan as a “group of one”. As HIPAA guaranteed insurance policies, both small and large group insurance policies cannot be denied to any group due to that groups previous medical history or type of business. Large group health policies also specifically cap the lifetime out-of-pocket costs for policyholders.

Group Insurance Plan Types and Coverage Levels

If you are looking at an employer-based group health insurance policy or coverage through an organization, you may encounter a few different plans. These are the standard insurance options available on the individual insurance policy state and federal marketplaces as well. When shopping for group health insurance, you are most likely to come across the following types of health insurance policies:

  • Health Maintenance Organization (HMO): HMOs are managed healthcare plans that provide policyholders with access to a specific network of medical providers in exchange for a monthly or annual premium and a combination of deductibles, copayments and coinsurance. Visiting out-of-network medical providers is either not covered or costs significantly more than receiving in-network medical care and policyholders must receive a referral from their primary care doctor to see any specialists.
  • Preferred Provider Organization (PPO): PPOs are also managed healthcare policies, but they generally allow policyholders much more leverage when it comes to choosing in-network or out-of-network medical professionals and seeing specialists.
  • Exclusive Provider Organization (EPO): With elements from both HMOs and PPOs, EPOs generally restrict a policyholder to visiting in-network doctors, but allows them to see specialists without first visiting a primary care doctor.
  • Point of Service (POS): POS plans are indemnity insurance policies that reimburse policyholders at a certain rate after the policyholder has already paid for all necessary costs upfront. These plans are often partially funded by pre-tax health savings accounts and other tax deductible funds. POS policies offer the most freedom for choosing medical providers but are also some of the most expensive policies on the market today.

Every health insurance policy is available at different coverage levels. While some insurance providers may use their own scale for coverage comparison, the basic differentiations in coverage for group policies are generally the same as for individual insurance policies purchased through the public marketplace. These coverage levels vary and depend on an enrollee’s health needs. For example, plans offered through the Health Insurance Marketplace are available in the following tiers:

  • Platinum: These plans that pay about 90 percent of a policyholder’s ultimate healthcare costs, often with higher premiums but lower out-pocket-costs.
  • Gold: Gold plans that pay about 80 percent of a policyholder’s healthcare costs.
  • Silver: These plans that pay about 70 percent of a policyholder’s ultimate healthcare costs.
  • Bronze: Bronze plans that pay about 60 percent of a policyholder’s ultimate healthcare costs, often with lower premiums but higher out-pocket-costs.

Eligibility Criteria for Group Health Insurance Policies

To join a group insurance policy, you must meet both the insurance provider’s minimum standards and the employer or membership group’s minimum standards. As comprehensive health insurance policies that are ACA compliant, applicants cannot be turned down for participation in a group insurance policy for a pre-existing condition nor can employers refuse to offer health coverage to any eligible employee. For most companies, eligible applicants are workers on the payroll who put in at least 30 hours per week on average and their dependent family members including spouses and children. For many employer-based group health insurance plans, a few categories of employees may not be eligible for coverage, including:

  • Temporary employees.
  • Seasonal employees.
  • Independent contractors.
  • Employees covered under a collective bargaining agreement.
  • Interns.
  • Non-employee directors of the company.
  • Retirees.

Typical Out-Of-Pocket Costs for Group Health Insurance Plans

Out-of-pocket costs for policyholders of group health insurance plans can range significantly on the policy coverage level and the contribution amount of the company or group in charge of the policy. In 2017, out-of-pocket costs for members of employee-based group health insurance plans were capped an annual total of $7,150 for individuals and $14,300 for families. In most cases, businesses pay over 50 percent of an employee’s healthcare costs when enrolled in a group health care plan, with a large proportion of companies paying up to three-fourths of an employee’s total medical costs. The minimum amount an employer or group must contribute to a member’s insurance policy changes by state.

Group contributions to member healthcare costs paid with tax-free contributions, offering a significant benefit to both the group and the policyholder. Even more, monthly insurance plan premiums can easily be taken out of your paycheck or monthly dues to a membership organization before the money ever goes into your banking account, making it easier than ever to budget for your healthcare needs. If you do not opt for an affordable and comprehensive healthcare plan offered by an employer and instead opt for a more expensive insurance policy through the state or federal marketplace, you may lose access to some tax benefits.

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