Group health insurance is a type of health insurance plan that businesses extend to their employees – and sometimes – the dependents of those individuals. Small and large business owners generally pay a part of the monthly premiums (or all of the premiums). The incentive for these businesses to provide group coverage is the large tax benefits that they can provide. This is different from individual insurance, as this type of insurance plan is purchased by individuals without the help of their employer or business. Some prefer individual insurance, as some group policies only allow a few tiered options.
The downside of individual insurance is that an individual may end up paying more when compared to group policy, where the employer typically pays for the majority of the premium. Either way, most citizens of the U.S. are required to purchase individual coverage or group policies, or they’ll face possible tax penalties under the Affordable Care Act, otherwise known as Obamacare.
The upside of an individual insurance plan is that the person will have more control over exactly what type of plan they purchase. As an employer, there are certain things that you can do to help your employees purchase individual coverage; however, offering group coverage to your employees usually ends up saving everybody some money.
Group Health Insurance Vs. Individual Health Insurance
There are a few differences when it comes to individual health insurance and group health insurance, especially when group health insurance is provided to a select group of individuals, such as retirees.
Individual policies account for an individual’s pre-existing medical conditions, circumstances, and age. Individual policies are more expensive on average than a group policy. Group health insurance policies are underwritten with a group of people in mind. When underwriting a group health insurance policy, insurance companies make assumptions about the general health of the group of people that will be covered by the insurance policy and cater towards that group.
Employers are not required to offer group health insurance if there are fewer than 50 full-time employees and it is illegal to deny someone health insurance based on a pre-existing condition.
Benistar: A Nationwide Leader in Group Retiree Medical Benefits
Benistar is focused on the design and administration of retiree medical and prescription drug plans. We work with brokers and consultants to provide the best retiree medical and prescription drug solutions for companies and organizations nationwide including:
- Labor Unions
- Educational Organizations
- Religious Organizations
- City and County Government Entities
- Publicly and Privately-held Companies
For all general enquiries, please contact us at 860-408-7000.