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What Is a Group Health Plan

HealthPlans of NC

Many employees in the United States receive their health insurance through a group health plan. This type of plan can also benefit small business owners and self-employed individuals. But what is a group health plan, and what are its benefits?

As with any health plan, the cost can be a concern. However, with proper information and understanding, you can know which type of plan works best for you. The experienced team of licensed insurance agents at Health Plans of NC can assist you during this process.

Understanding How Group Health Plans Work

A company offers a group health insurance plan to its employees. The company will select the type of group plan, and the employees can decide whether or not they want to accept coverage. It is important to note that 70% of full-time employees must be covered. If not, the plan is not considered valid. 

Group Health Plan Benefits

The biggest pro of a group health plan is its cost-effectiveness. Since it covers a large number of employees, the costs are spread across more individuals. This is in great contrast to an individual health insurance plan, where the policyholder pays the full cost alone. With more people sharing the costs, monthly premiums can often be lower.

What Are The Types of Group Health Plans?

There are several different types of group health plans. Each has distinct characteristics, including unique costs and coverage benefits. Therefore, it is essential to know which kind of plan your company is offering.

HMO (Health Maintenance Organization)

With an HMO plan, you must visit doctors and specialists in your plan’s network. Typically, this results in a more affordable plan. However, services provided by doctors not in-network may not be covered. 

PPO (Preferred Provider Organization)

Compared to other health plans, a PPO allows you the greatest flexibility. You can stay with your preferred doctor, even if they are out-of-network. Understandably, picking an in-network doctor would be cheaper as out-of-network providers will have higher copayments. 

HDHP (High Deductible Health Plan)

This type of plan has a higher deductible but a lower monthly premium. An HDHP is a great plan for someone who does not need extensive medical services. Commonly, your employer may offer this plan with an HSA (Health Savings Account). This allows you to deposit tax-free money towards expenses such as copayments and coinsurances. It is important to state that any money you don’t use will be reinvested the following year.

Fully-Insured Plan

With a fully insured plan, the employer is charged a yearly premium from the insurance company based on their health insurance policies. Typically, this rate is determined by the type of plan the company chooses and the number of insured employees. This is one of the safest health insurance plans.

Self-Funded Plan

While a fully insured plan is safer and more predictable, a self-funded plan offers more flexibility. It is the employer’s responsibility to manage its own costs and fees. Doing so also allows the company to choose a plan that best fits its employees' needs.

Level-Funded Plan

Unlike typical annual premiums, level-funded plans include monthly premiums. This can be a better option for smaller companies, as the number of employees factors into monthly costs. The amount will change yearly.

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Know If You Are Eligible for Group Health Insurance

You are eligible for group health insurance if you are a full-time employee. Under the Affordable Care Act, a large company (50+ employees) must offer health insurance. As previously stated, a company must cover at least 70% of employees. They can be hit with heavy penalties if they don’t reach this minimum percentage. Therefore, offering comprehensive and affordable health insurance is in your company’s best financial interests.

How Far Does Group Health Insurance Cover?

A group health insurance plan will offer medical coverage to all full-time employees. An employer may also choose to provide insurance for all part-time employees. You are eligible to receive coverage even if you have pre-existing medical conditions. In addition, group health insurance also includes family coverage. Furthermore, specific group health plans can also provide vision and dental insurance.

Lastly, a company might offer a benefits plan. With a benefits plan, an employer will continue to give benefits during retirement.

Budgeting for a Group Health Plan

Understanding how much you need to pay for health insurance is crucial. If not, you can have missing payments, which would result in a temporary loss of coverage. Your premium costs, coinsurance rates, and total deductible will be determined by your plan type and your insurance company. An individual’s age may also be a factor.

Are Group Health Plans Available for Small Business Owners and Self-Employed?

A small business is defined as one with less than 50 employees. Similar to larger businesses, the company can choose a fully insured, level-funded, or self-funded plan. Eligibility requirements vary by state. For example, 75% of small-business employees in New Jersey must be insured through the company. Small businesses may receive a tax benefit of up to 50% if they meet specific requirements.

Start a Group Health Insurance Plan With Licensed Agents

Many times, it is important to ask for help. A licensed insurance agent can answer any questions about group health insurance. With vast amounts of knowledge and experience, they can assist you in finding a plan that best meets your needs.


Frequently Asked Questions

What is an example of group health insurance?

A group health insurance plan can cover small and large businesses. There can be unique payment methods and plan types. For example, your employer may offer an HMO plan.

What is a group health plan under HIPAA?

Group health plans do comply with HIPAA policies. Your private health information will be safe and secure.

Who is covered under a group insurance plan?

A group insurance plan offers individual and family coverage regardless of pre-existing medical conditions. Depending on the company's health insurance policies, part-time employees may also be offered medical coverage.

Can you provide a group health insurance plan to 1099 employees?

Yes, you can offer a group health coverage plan to 1099 employees. This is not required by law but can improve workplace happiness and loyalty. Also, increasing the number of insured employees will reduce overall premium costs.

How should startups get group health insurance?

A startup company can purchase group health insurance through a private healthcare company. It would be wise to consult an insurance agent, as they can provide accurate and useful information.

Which is the best group insurance policy for employees?

The best group insurance policy for an employee is one that is both affordable and provides proper coverage.

Do You Want To Speak With an Experienced Insurance Agent?

Health coverage is essential, but finding the best insurance plan can be difficult. There are so many variables and terms businesses need to be aware of. 

That said, an experienced insurance agent can help you find the right plan that accommodates your lifestyle and financial circumstances. You can schedule an appointment with Health Plans of NC at 800-797-0327. Or, receive your free quote today.

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