Group Health Insurance Plans and the Associated Benefits

Group Health Insurance Plans and the Associated Benefits

A Brief History

Group Insurance is not a new idea. In fact, the idea for Group Health Insurance Plans was brought into existence in the 20th century. The Great Depression and the World War brought the idea for collective coverage. The idea was to issue the insurance plans for a group of people belonging to the same category. This idea was wildly popular because it offset the inability of a majority of consumers to pay for individual plans.

Eventually, during the second world war, employers started offering group health insurance plans to attract employees when wartime legislation mandate pushed for flattened wages. This tactic proved to be a popular tax-free benefit that continued to be viable for employers, even after the war had ended.

Group Health Insurance Definition

Group Health Insurance Plans are geared towards groups of people who share several similar characteristics. These people usually share the same company in their position as employees, or they share membership of a certain organization in a similar capacity. The insurance plans which are designed for groups usually cost significantly less than individual plans. That is because the insurer’s risk is spread equally across multiple policyholders, thus reducing the overall burden.

Group Health Insurance Coverage Parameters

Group Health Insurance is ordinarily purchased by the relevant organizations. These organizations then offer those plans to their employees. Since these plans are geared towards groups, it stands to reason they are not available for individuals to purchase. Group Health Insurance coverage varies from draft to draft. The final details or draft of typical plans show that no two plans are ever the same. It is because of so many individual differences, such as:

  • Different Insurers
  • Dissimilar Plan Types
  • Varying Costs
  • Relevant Terms and Conditions

Note: Group Health Insurance Plans cannot be purchased by individuals. They require at least 70% participation by the group members.

Important Points Must Remember About Group Health Insurance

  1. If an organization has chosen a plan, the prospective group members are given the option to either accept or decline the coverage.
  2. The plans may be offered in the form of tiers by certain providers. This is done when insured parties are given several options to choose from in a customized policy. The customized policy usually has an addition or the absence of add-ons.
  3. Premiums are split between the organization and its members, as agreed upon in the plan.
  4. Some contracts might be able to include additional members, such as immediate family or other dependents for an extra cost.

Affordability of Group Health Insurance Plans

Group Health Insurance Plans usually cost significantly less as compared to individual plans. This is because the risk is spread across a higher number of people. This kind of character makes an insurance plan much more affordable for a common citizen belonging to a relatively lower demographic.

Group Health Insurance Benefits

Following are the most prominent Group Health Insurance Benefits:

  • The Group Health Insurance Plans spread the risk across several individuals who are insured.
  • The premiums in group insurance are naturally kept low because of risk being spread over multiple policyholders.
  • The insurers can manage the risks better when they have a clear idea of who they provide coverage for.
  • Insured individuals are in a position to exert greater control over the policy costs through HMOs.
  • An HMO model tends to keep low costs. This is because of the cost of restrictions on the flexibility of care afforded to insured individuals. This is especially appropriate for small group health insurance plans.
  • The insurance offered through Preferred Provider Organizations (PPO) offers a greater choice of healthcare providers, as well as specialists. However, the charges in the form of premiums are significantly higher as compared to HMOs.
  • The majority of group health insurance plans are employer-sponsored benefit coverage.
  • It is also possible to purchase required group coverage through a third-party organization.

Special Considerations in Group Health Insurance

While there are numerous benefits of group health insurance, not every individual can be covered by it. Such uninsured people used to be forced to bear health insurance costs of their own accord. However, it has changed.

There are Government-sponsored health plans available for such individuals who have been left out of group health insurance sponsored by their employers. According to Obamacare, or Affordable Care Act, a nationwide mandate was passed for each taxpayer to join a group plan. More than 20 million Americans have taken advantage of ACA-sponsored health insurance in the year 2018.

My Thoughts

It is a necessity to purchase Group Health Insurance Plans for small businesses in my humble opinion. Especially those who employ a relatively large number of people. This is because small business owners generally cannot afford the more expensive kinds of healthcare. As a member of the insurance community, I would advise all my readers to opt for this option if they fall under the criteria. For those who live in Dallas, Texas, there is no better option for them than SGA Financial Inc. It is a good organization that treats its customers as people instead of just numbers on a paper. They will not turn you astray.