What is Group Health Insurance? Can I get it?

Without appropriate health insurance coverage, hospitalization or a serious illness can be financially devastating, which can be a very hard lesson to learn. In today’s uncertain economy, with rampant unemployment and many companies looking for ways to trim expenses, there are far too many people that are vulnerable, should they or someone in their family be stricken by a serious health issue.

Health insurance, like any other type of insurance, is sometimes seen as an unnecessary expense – until it’s needed – then it can be very welcome, indeed.

Some people purchase individual or family health coverage, but that is often considerably more expensive than group insurance, which is the more common solution. Group health insurance often presents the lowest cost to the insured, and can be acquired with varying levels of flexibility in its available options.

What is Group Health Insurance?

Group health insurance is a health insurance program that is offered to a common class, such as employees of a company or members of an organization. Such group policies can present a lower cost to each individual by spreading the risk across many members. Essentially, the insurer is gambling that only a certain percentage of insured members will require the coverage.

These offerings are regulated by each state, so the qualification requirements, type of coverage offered and the method of pricing the policy can vary significantly by location.

There are also different classes of group health insurance, differentiated by the size of the sponsoring group (company, association, credit union, etc.) and the type of plan. Essentially, this depends upon the number of people to be insured and the treatment network available.

In the case of companies, for instance, the common method of classification is by the number of employees: less than 25 employees, 26-50 employees or more than 50 employees is the typical breakdown. HMO, PPO andPOSplans will also result in different costs, per the different network structures involved.

The Patient Protection and Affordable Care Act (PPACA, also commonly referred to as ObamaCare), signed into law in March of 2010, is being enacted in phases, with completion in January 2020. The majority of PPACA’s benefits will be available to citizens in January 2014.

In the meantime, health insurance carriers are adjusting for the coming changes, as are employers. By 2014, all companies with more than 50 employees will be required to provide health insurance for their employees. Those individuals who do not receive insurance from their employer, and can afford to do so, will be required to purchase it themselves.

For the companies, such insurance is certain to be group coverage, as it presents the lowest cost. Typically, all else being equal, the more subscribers that are enrolled, the lower the cost. However, depending upon the locale, the premiums for an insured individual may vary by age or health, and can also vary by statistical risks in the region.

Basically, group policies require that all employees of a similar class (possibly classified by age or health status) must be offered the same coverage for the same premium.

In a particular state, the premium for a 25-year-old, non-smoking female with no health issues might be significantly lower than for a 58-year-old male who smokes and has diabetes. In another state, the premium might be identical. This is determined by each state’s regulatory statutes.

One important aspect of group health insurance under the PPACA, however, will be that in no state will the insurer be able to deny coverage to anyone because of a pre-existing condition.

Who Qualifies for Group Health Insurance?

Aside from employers, there are already many other types of sponsors for group health coverage. Some large credit unions, fraternal organizations, associations and societies have sponsored group coverage, with health insurance being one of the benefits of membership.

Any full-time employee of a company with a group policy or full member of any organization that offers group health insurance is usually eligible for the coverage. Some factors can enter into such qualification, however, such as the number of hours per week to be considered a full-time employee and the membership level in the sponsoring organization.

Group health insurance via one’s employer is often more attractive than an individual or family policy for a number of reasons:

  • Companies can combine with others in strategic alliances to improve their group insurance rates
  • Carriers that insure many large employers can leverage their overall risk across many clients, which can allow them to offer lower rates
  • Companies often cover a portion of—or all—the insurance premium for the employee.

Other Options

Since 1986, if you have health insurance via your employer and you lose your job, you can extend your group health insurance coverage via a COBRA (Consolidated Omnibus Budget Reconciliation Act) conversion. This protects you from suddenly being left without health insurance.

COBRA conversion is essentially just an extension of time in which you can continue to be covered by your previous employer’s group coverage, after you are no longer employed there. The cost may be substantially higher to you, however, since your employer may have been paying part of your premium, and you will now be responsible for the entire cost.

As the major implementation of the PPACA in 2014 approaches, it’s probable that many more entities will be looking for creative ways in which to consolidate their group health insurance needs, leveraging their buying power in order to accommodate those that will be required to purchase their own coverage.

Summary

In theU.S., health insurance of some sort will soon be required for everyone, whether provided by employers or acquired by individuals, and in some manner, the costs of that insurance will affect the insured.

Making informed decisions can help you find the best health coverage at the lowest cost to you, while affording you peace of mind that an accident or serious illness won’t result in financial ruin.

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