Group health plans are insurance policies that offer coverage to groups, such as a company’s employees or members of an organization. These policies are typically offered through an employer or an employee organization (such as a union), with the employers paying for some or all of the premiums. These types of insurance policies are more regulated than individual health plans. Under federal law, companies offering group health benefits are required to offer the same coverage to all employees regardless of their current or previous employment status. This requirement is known as a guaranteed issue. In addition, federal law requires that group insurance companies can’t impose pre-existing condition waiting periods for new hires.
A group health plan can be either fully-insured or self-insured. In a fully-insured group health plan, the Plan Sponsor (for example, the employer or labor union) contracts with a Health Insurance Issuer or HMO to provide their employees and members with medical care. A third-party administrator for a group health plan is also considered to be a Business Associate and must comply with HIPAA regulations. Small group health insurance is available for employers with two or more employees, and large group health insurance is available to employers with 100 or more employees. Often, employers will bundle their group health coverage with other benefits, such as dental or vision insurance. While every group health plan will differ from one another due to cost variations, insurance companies, networks, and other specifications, most will offer similar healthcare features and services.
Who is Eligible?
Group health plans are an important benefit for employees. They can help offset the cost of medical care and allow companies to attract and retain top talent. But there are a few things to keep in mind when shopping for group insurance. Many of these plans are offered by businesses, but they can also be available through professional associations, trade groups, and other organizations that share similar interests. Regardless of who the provider is, a business that offers a group health plan must follow federal guidelines to avoid penalties under the ACA.
Most of these policies cover a company’s workforce and their dependents, but they can vary depending on the policy. For example, some offer a specific range of benefits like dental and vision. Others may include supplemental coverage such as hospitalization and prescriptions. Typically, a business must have at least two W-2 employees to be eligible for group insurance. Individuals may waive coverage with a valid waiver form or enroll in a personal health plan. Most of these plans are governed by ERISA, or the Employee Retirement Income Security Act, which sets minimum standards for participant rights and fiduciaries. Once a worker joins a group insurance plan, they’re generally locked in for a year. However, if they lose their employer-sponsored plan or experience another major life event, they’ll have to shop for new coverage in the individual market.