What Is Group Health Insurance?
Group Health Insurance is a type of medical insurance policy for employees or members of a company or organization. A group health insurance plan typically provides health insurance coverage to its members at a lower cost since the risk to health insurers is spread across the members of the group health plan.
How Group Health Insurance Works?
Businesses and organizations buy group health insurance plan in order to provide medical coverage to their employees or members. Only groups, and not individuals, can enroll in group medical insurance plans. Although all group health insurance plans are different due to variations in costs, health insurance companies, group plan types, and plan specifications, they typically share the following characteristics:
- Group medical insurance plans require a certain percentage of employees to enroll in order to qualify;
- Group members have the choice of enrolling in or declining health coverage.
- Group health premiums can be shared between the company and its employees.
- Family members and dependents can be added to group plans at an additional cost.
- Advantages of Group Health Insurance
The main benefit of group medical insurance is that group plans tend to have relatively low premiums. Due to the advantage of larger risk pools, group health insurance plans are often more affordable than individual health plans. When more people enroll in a group medical insurance plan, this spreads risk across a wider number of plan members in the group pool, allowing the high insurance cost of any one individual to be balanced by the premiums paid by other members of the plan.
One of the other major advantages of group medical insurance is the potential for tax benefits.
- For an employer, the money paid toward the monthly employee premium is usually tax-deductible.
- For employees, premiums are paid with pre-tax dollars, reducing their taxable income.
- Eligible small businesses may be able to qualify for the small business health care tax credit.
To learn more about your options for affordable group health insurance, contact us, and we will be glad to answer any questions you may have.