Benefits of Group Health Insurance Plans
Group health insurance policies offer several advantages over individual plans. Many employers provide supplemental health plans, which include dental, vision, and pharmacy coverage, either separately or as a bundle.
Among the leading benefits of group plans are lower premiums and the ability to include family members and dependents. This option, available at an additional cost to members, can be a lifeline for families with sole providers or those facing high prices for alternative or individual health plans.
Group health insurance plans provide numerous tax benefits to employers and employees. The money employers pay towards monthly premiums is tax-deductible, and employees’ premium payments can be made pre-tax, thereby reducing their total taxable income.
Small businesses may also qualify for the small business healthcare tax credit. The credit benefits an employer with fewer than 25 full-time employees who pay average wages of less than $50,000 a year. The employer offers a qualified health plan through the Small Business Health Options Program (SHOP) Marketplace and pays at least 50% of the cost of health care coverage for each employee (but not for family or dependents).
Who Can Sign Up for Group Health Insurance?
Understanding the eligibility criteria for group health insurance is crucial. Generally, an employee must be on the payroll, and the employer must pay payroll taxes to be eligible. However, there are exceptions. Independent contractors, retirees, and seasonal or temporary employees are usually not eligible. Similarly, employees on unpaid leave may not be covered until they return to work. Explicit knowledge of these criteria can help employers and employees make informed decisions.
Group health insurance coverage must also be offered to an employee’s spouse and dependent children until age 26, though employers may choose to expand the age definition for child dependents. Employers may also opt to extend health benefits to unmarried partners of the same or opposite sex.
How to Enroll in Group Health Insurance
Enrollment in a group health care plan your employer provides is generally available at the beginning of employment. Employees often must wait until the annual open enrollment period to join if the enrollment deadline is missed. Some employers may wait up to 90 days before new employee health insurance is available. Employees do not pay premiums during this time, but you won’t have access to health care coverage.
Many group health insurance plans offer different tiers and/or supplemental coverage, such as dental, vision, and/or pharmacy. These options are initially elected when an employee enrolls and may be changed and updated during future open enrollment periods. In the event of a significant life event such as a marriage, the birth of a child, or a spouse’s loss of employment, you may be able to enroll these new dependents in your group health insurance plan outside the open enrollment 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 doesn’t offer health insurance due to the company’s small size or you are unsatisfied with your employer’s coverage options, you may seek coverage through a membership organization.
Group Health Insurance for the Self-Employed
According to a 2020 report from the U.S. Small Business Administration Office of Advocacy, approximately 25.7 million small businesses in 2017 were considered “non-employers,” or businesses with no paid employees. If your business has no employees, you’re considered a small group of one.
Even though you’re self-employed, you may be able to buy group health insurance for your company in certain states. Check with your state’s insurance department to determine whether your state allows group policies to be sold to groups of one.
What to Do If You Lose Your Group Health Benefits
You will likely lose your employer-sponsored group health insurance if you lose your job. However, you and your dependents may be able to keep this coverage through continuation coverage.
In 1985, Congress passed the Consolidated Omnibus Budget Reconciliation Act (COBRA), which allows employees who lose their jobs to buy group health coverage for themselves or their families for a limited time. Under COBRA, the same group insurance plan with the same benefits must be made available to the terminated worker; however, the former employee must pay the total cost—including whatever the employer has previously covered—of the plan.
Continuation coverage is often much more expensive than an individual health insurance plan, so consider the price, benefits, and provider network carefully before temporarily keeping coverage through continuation coverage instead of moving to an individual plan.