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According to 2019 census data, nearly 50% of insured Americans have health insurance coverage through group plans provided by employers. However, many of them may not have given much thought to how exactly this group health insurance works.
Group health insurance offers many advantages, but when your insurance plan is directly linked to your employment, you risk a sudden loss of your health coverage if your professional situation changes. In 2017, 22% of uninsured Americans reported losing health insurance due to job loss or a change in professional status.
Whether you’ve recently started a new job and want to learn more about how your new group coverage works, already have group coverage and want to learn more, or just lost or quit your job and whether you are worried that you have lost your health insurance coverage, this guide can help you understand the ins and outs of group health insurance.
What is group health insurance and how does it work?
Group health insurance, sometimes referred to as employer-sponsored coverage, is a type of health insurance plan offered by the employer of a member organization. Members of a group health insurance plan generally benefit from lower cost coverage, as the risk to the insurer is distributed among several members.
Under the Affordable Care Act (ACA), businesses with 50 or more full-time employees must provide health insurance for full-time employees and dependents under the age of 26 or pay a fee. Insurers are also required to provide group coverage for organizations with as few as two employees. Some states also allow the self-employed to benefit from group coverage schemes.
Group health insurance plans are selected and subscribed by companies or organizations, then offered to employees. In most states, a group insurance plan must have a participation rate of 70%, although some states have a minimum rate higher or lower.
Benefits of group health insurance plans
Group health insurance policies have a number of advantages and advantages over individual plans. Many employers offer supplemental health insurance plans, which include dental coverage, vision coverage, and drug coverage, either separately or as a package.
The main offer of group benefit plans is lower premiums. According to a 2018 study by eHealth, a private online marketplace for health insurance, the average cost of premiums per individual in a group health insurance plan was $ 409 per month, compared to $ 440 for one. individual plan. In the same study, small group health plans had an average deductible of $ 3,140 per year, compared to $ 4,578 for individual plans.
Additionally, family members and dependents can be added to group plans at an additional cost to members, which can help families with single providers or whose alternative or individual health plan options have challenges. significantly higher prices.
Group health insurance plans offer many tax advantages to both employer and employee. The money employers pay for monthly bonuses is tax deductible, and employee bonus payments can be made before tax, which can reduce their total taxable income.
Certain small businesses may also be eligible for the Small Business Health Care Tax Credit. Small Business Health Care Tax Credit benefits employer with less than 25 full-time employees who pay an average salary of less than $ 50,000 per year, offers qualifying health care plan through market of the Small Business Health Options (SHOP) program and pays at least 50% of the cost of health care coverage for each employee (but not for family or dependents).
Who can subscribe to group health insurance?
To be eligible for group health insurance, an employee must be on payroll and the employer must pay payroll taxes. People usually ineligible for group coverage include independent contractors, retirees, and seasonal or temporary employees. Employees who are on leave without pay are often not eligible for group coverage until they return to work.
Generally, group health insurance coverage should also be available to an employee’s spouse and dependent children up to the age of 26, although employers may choose to broaden the definition of l age for dependent children. Employers can also choose to extend health benefits to unmarried same-sex or opposite-sex partners, and this coverage should reflect the coverage extended to spouses in the same plan.
How to sign up for group health insurance
To enroll in a group health care plan offered by your employer, find out about the enrollment deadline once hired. If you miss this deadline, you may have to wait until the annual open registration period to register. Some employers may have waiting periods of up to 90 days before new hire health insurance begins. You won’t have to pay any premiums during this time, but you won’t have access to health care coverage either.
Some group health insurance plans offer different levels of coverage or additional coverage such as dental, vision and / or pharmacy. During open enrollment periods, you can make decisions about these insurance choices offered by your employer, as well as add or remove dependents. If a major life event such as a marriage, the birth of a child or the loss of a spouse’s job changes your situation, you may be able to enroll these new dependents in your group health insurance plan. outside the open membership period.
Where to find group health insurance plans
The most common way to get group health insurance coverage is through an employer. If your employer does not offer health insurance due to the small size of the business, or if you are unhappy with your employer’s coverage options, consider coverage through an organization. membership. If you belong to an organization that offers a group health plan, such as AARP, National Association of Female Executives, Writer’s Guild of America, or Freelancers Union, you may be able to get health insurance coverage through your membership.
Beware of the plans offered by some member organizations, as many offer a “discount on health care” plan, which can save you money on prescriptions, but is not a true plan. Health Insurance.
Group health insurance for self-employed workers
About 25.7 million small businesses in 2017 were considered “non-employers” or businesses without paid employees, according to a 2020 report from the US Small Business Administration Office of Advocacy. If your business has no employees, you are considered a small group of one.
Even if you are self-employed, you may be able to purchase group health insurance for your business in some states. Check with your state’s insurance department to determine if your state allows the sale of group policies to groups of one.
What to do if you lose your group health insurance
If you lose your job, you also risk losing your employer-sponsored group health insurance. You and your dependents may be able to keep this coverage with something called continuation coverage.
In 1985, Congress passed the Consolidated Omnibus Budget Reconciliation Act (COBRA), which allows employees who lose their jobs to purchase group health coverage for themselves or their families for a limited time. Under COBRA, the same group insurance scheme with the same benefits must be made available to the dismissed worker; however, the former employee must pay the full cost, including anything the employer has already covered, of the plan.
Continuity coverage is often much more expensive than an individual health insurance plan, so think carefully about the price, benefits, and provider network before choosing to temporarily keep your coverage with continuation coverage instead of switch to an individual plan.