Ask Your Employer About Group Health Plans
Healthcare is expensive, really expensive. We all know health insurance is a must, but the premiums are sky-high. For an individual looking for private health insurance, you will probably be spending more than $300/month, for a high-deductible plan.
Fortunately, if you have an employer, you will likely have access to some sort of health insurance provided through your company, with some exceptions. These plans are less expensive for the same amount of coverage because many employees have employers that share the cost of their health insurance, as part of their benefits package.
What is Group Health Insurance?
Group health insurance (GHI) is a type of health insurance policy for employees of a company or members of an organization. Since the insurer’s risk is spread across an entire group of policyholders (employees), members of the plan are able to receive insurance at a reduced cost.
The availability of group health insurance is one of the most advantageous benefits employers offer, right alongside a 401(k). Make sure you’re taking advantage of it.
How Does it Work?
Businesses and organizations buy group health insurance plans for their employees or members. These plans can only be purchased in groups, which is why they’re commonly referred to as employer-sponsored health insurance. For this reason, individuals are ineligible for this type of coverage.
Once purchased, employees are given the option to accept or decline coverage, and if they’d like to add on any dependents. The insurance premiums are then split between the organization and its enrolled members.
This coverage means your insurance company will pay a portion (or all of) your medical costs, including regular checkups, injuries, or other treatments. The amount and services covered vary by plan.
Members’ options usually include at least one high-deductible option and one preferred provider organization (PPO) option, allowing them to tailor their coverage (and associated premiums) to their specific needs.
What are the Benefits?
The primary benefit of a group health insurance plan is the reduced cost of medical coverage. This is a direct result of the insurer’s ability to spread risk across the whole set of group participants.
Although the specifics of each plan vary, group health insurance plans typically have these overlapping characteristics:
- Premiums are shared between the company and its employees
- Family members and other dependents can be added to group plans under an employee’s name, usually at an additional cost
- Group health insurance plans typically require a 70% participation rate
- Members have the choice of enrolling in or declining coverage
- For employees, premiums are paid with pre-tax dollars, which reduces the total amount of your taxable income (lowering your tax bill)
The benefits of employer-sponsored group health insurance don’t stop with the employees, however. Though it’s offered as an attractive incentive for employees and new hires, businesses also benefit from providing group medical insurance:
- For employers, the money used to pay for monthly premiums is usually tax-deductible
- Eligible small businesses may qualify for the small business health care tax credit
Deductibles
In an insurance policy, the amount of money paid by you before the insurance provider pays anything is known as a deductible. The higher the deductible, the more you are required to pay before your coverage kicks in.
- High Deductible: Typically, when you choose a plan with a lower monthly premium, your insurance will cover a lower amount when you get care, requiring you to pay the difference.
- Low Deductible: Typically, when you choose a plan with a higher monthly premium, your insurance will cover a higher amount when you get care.
For example, if your deductible is $1,000 and you fall and break your leg, the first $1,000 of expenses will be yours to bear. Any expenses over that first $1,000 will be covered by your policy.
Group Health Insurance Options
There are a variety of group health insurance options available to employers, each with its advantages and disadvantages. It’s up to you to determine which makes the most sense for your business’s needs.
Some of the most common are:
- Fully-Insured Plans
- Self-Funded Plans
- Level-Funded Plans
- Health Maintenance Organization (HMO)
- Preferred Provider Organization (PPO)
- High-Deductible Health Plan (HDHP) with a Health Savings Account (HSA)
Have questions about your Group Health Insurance or Group Health Plans? TRAC Advisor Group is here to help. Contact our team and start a conversation.
What is a Group Health Plan?
A group health (GH) plan is an umbrella term that encompasses a variety of employer-provided benefit plans. The plan is established and maintained by a company or an organization and offers medical coverage through insurance, reimbursement, or otherwise.
Group health plans are almost always beneficial for both employers and employees. Plus, they make for an attractive benefit when hiring. There is an abundance of plans available to meet the needs of every organization, large, small, and in between.
The most common type of group health plan is group health insurance.
What is the Difference between GHI and GH Plans?
Group health plans do not provide insurance directly. Employers will make sure a GH plan includes either group health insurance, self-insured, or a reimbursement plan for their employees to have access to health benefits.
A group health insurance plan is a subset of a group health plan.
Conclusion
Health Care costs can erode a retirement portfolio, so make sure you’re covered. Group health insurance plans offer premium medical coverage at incredibly affordable prices. Since the insurer assumes less risk by diversifying across an entire pool of members, the premiums for these plans are considerably lower than individual health insurance plans.
Plus, they’re not overly expensive for employers to offer, and make for a great benefit when trying to attract new talent. Talk to your HR department today about the options made available to you by your employer.
The beginning of the new year offers you the chance to look back over your policy to ensure your coverage is exactly what it should be based on your needs and current situation.
TRAC Advisor Group Inc. is a full-service, fee-based financial advisory firm in Norman, OK. We offer independent investment advice and help people withstand any type of market volatility with confidence.
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