What Is A Group Health Insurance Plan And What Are Its Benefits?
Group health insurance plans cover a group of members who usually belong to an organization or are employees of the same company. Group members receive coverage at a lower cost. To be valid, the plan needs a participation percentage of 70 or more. Premiums are divided between the members and the organization. By shelling out an extra cost, the member’s families and the dependents might as well receive coverage. While offering this kind of insurance plan to their employees, employers can avail themselves of the tax benefits. But to understand a group health insurance plan and its benefits in detail, you might need to dive a bit deeper.
How Does It Work?
The companies/organizations buy the group health insurance plans and offer them to their employees/members. Individuals are not entitled to receive coverage through these insurance plans as they are for groups only. The minimum percentage of participation is 70 for the plan to be valid. The costs, insurers, types of plan, as well as terms and conditions vary from one plan to another.
Therefore, no two group health insurance plans are identical. After an organization or company picks up a plan, the group members can either accept the health coverage or simply, decline it. The cost of such plans is on the lower side as compared to individual ones. The major reason behind this is that more people have to face the same risk. Group health insurance plans are also cheaper as more people purchase them.
How Many Employees are Needed to be Eligible for Group Health Insurance
Several group health insurance providers offer plans to organizations/companies with an employee strength of one or more. However, the type of plans that are on offer might differ as per the size of a business. United Healthcare, for instance, offers coverage to businesses that have an employee strength of one to 99. The mid-sized business houses are required to have an employee strength of 100-2999. As far as large organizations are concerned, employers are required to have 3000+ employees working under them to be eligible for the group health insurance plans.
Benefits Of Group Health Insurance
As the risk is spread to various insured individuals, the premiums are low for each one of them. This is the major benefit of group health insurance plans. Insurers are in a better position to manage risk as they have a distinct idea of whom they are providing coverage. They also have greater control over costs through HMOs or Health Maintenance Organizations, in which the healthcare providers enter into a contract with the insurance providers to offer healthcare to the members or employees.
Through the HMO model, the costs are quite low but the flexibility of healthcare is restricted. On other hand, the PPOs or Preferred Provider Organizations offer more flexibility at the cost of higher premiums as compared to the HMOs. The group health insurance plans mostly benefit plans sponsored by employers. However, buying group coverage through organizations or associations such as the Freelancers Union, the American Association of Retired Persons, as well as wholesale membership clubs is possible.
Every individual doesn’t have a group health insurance plan. The uninsured people had to pay for healthcare all by themselves for a long time. However, things are not the same anymore. Those who don’t receive coverage through group insurance plans can avail health plans that are sponsored by the government. If reports are taken into account, the national health expenditures have been climbing higher for some time and recently, they have crossed 17.7% of the country’s GDP.
As of 2019, nearly 23 million people in the United States have availed the benefits of a health plan under the Affordable Care Act. While the Obama administration ruled that those who didn’t get a health insurance plan for themselves under the Affordable Care Act would have to shell out a health insurance mandate, the Trump administration kind of repealed that. It stated that people don’t deserve to be penalized without any valid reason.
There is no doubt that group health plans are quite easy on the pockets. If any employee or member finds that they can’t afford an individual health plan, group health insurance plans can be perfect for them. Since more people are covered under such a plan, it’s less risky for the insurers too.
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