Group health insurance is a type of medical insurance policy for employees or members of a company or organization. A group health insurance plan typically provides health insurance coverage to its members at a lower cost since the risk to health insurers is spread across the members of the group health plan.
Businesses and organizations buy group health insurance plans in order to provide medical coverage to their employees or members. Only groups, and not individuals, can enroll in group medical insurance plans. Although all group health insurance plans are different due to variations in costs, health insurance companies, group plan types, and plan specifications, they typically share the following characteristics:
To enroll in a group health insurance plan, a business needs at least one full-time or full-time equivalent employee. According to the Affordable Care Act (ACA), small businesses with less than 50 full-time or full-time equivalent employees are not required to offer health insurance, while larger employers with more than 50 full-time employees are required to provide group medical insurance to their workforce.
The main benefit of group medical insurance is that group plans tend to have relatively low premiums. Due to the advantage of larger risk pools, group health insurance plans are often more affordable than individual health plans. When more people enroll in a group medical insurance plan, this spreads risk across a wider number of plan members in the group pool, allowing the high insurance cost of any one individual to be balanced by the premiums paid by other members of the plan.
One of the other major advantages of group medical insurance is the potential for tax benefits.
Businesses and organizations can enroll in group medical insurance plans at any time during the year. Most group health plans are forms of employer-sponsored group health insurance, although medical insurance can also be bought through professional organizations or associations.
Common examples of group health plans include Health Maintenance Organization (HMO) plans and Preferred Provider Organization (PPO) plans.
To learn more about your options for affordable small business health insurance plans, visit eHealth.com or speak with one our licensed insurance agents.
This article is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.