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What Is a Group Health Plan: Ultimate Guide

HealthPlans of NC

For many employees in the United States, they receive their health insurance through a group health plan. This type of plan can also be beneficial for small business owners and self-employed individuals. But what is a group health plan, and what are the benefits associated with it?

As with any form of 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 group health insurance plan is one that is offered by a company 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 plethora 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 its own distinct characteristics with unique costs and coverage benefits. Therefore, it is important to know which type of plan your company is offering.

HMO (Health Maintenance Organization)

With an HMO plan, you are required to visit doctors and specialists that are in your plan’s network. Typically, this will result in a more affordable plan. 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 amount of flexibility. You can choose to 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 reinvest 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 what 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 their own costs and fees. Doing so also allows the company to choose a plan that best fits their employee’s needs.

Level-Funded Plan

Unlike typical premiums, which are annual, level-funded plans include monthly premiums. It can be a better option for smaller companies as the number of employees factors into monthly costs. This 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 provide coverage to at least 70% of employees. If they don’t reach this minimum percentage, they can be hit with heavy penalties. Therefore, it is in your company’s best financial interests to offer comprehensive and affordable health insurance.

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 offer insurance to all part-time employees. You are eligible to receive coverage even if you have pre-existing medical conditions. In addition, group health insurance also provides family coverage. Furthermore, certain 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

It is crucial to understand how much you need to pay for health insurance. 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 be a factor as well.

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

A small business is defined as one having less than 50 employees. Similar to larger businesses, the company can choose a fully insured, level-funded, or self-funded plan. There are different eligibility requirements per state. For example, in New Jersey, 75% of small-business employees must be insured through the company. Small businesses may receive a tax benefit of up to 50% if they meet certain 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. Part-time employees may also be offered medical coverage, but this is dependent on the company’s health insurance policies.

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

Yes, you are allowed to 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 you with 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 trying to find the best insurance plan can be difficult. There are so many variables and terms businesses need to be aware of. 

With that being 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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