If you have employees, you might be wondering if it makes sense to offer them group health coverage too. Group health insurance is often called “health insurance for your whole company” because it can be a great way to help employees who need medical care. But, like standard individual health insurance, group plans have their own unique pros and cons. Here are the top 10 things you need to know if you’re considering offering your team group coverage.
What is group health insurance?
Medigap plans are not health insurance. The Affordable Care Act (ACA) requires that GMC insurance cover an individual’s medical expenses. But the type of coverage you buy may look a whole lot like health insurance, but it is not insurance. In fact, it’s not even close. With group health coverage, an organization (like a company) buys insurance for the entire group, not for each individual employee.
The plan is then “grouped” into an entity known as a “health insurance plan trust” (or “trust”) that owns a “trusted” pool of coverage for all the employees in the plan. The plan trust is responsible for administering the coverage and paying medical claims for the members.
Group health insurance costs more than individual coverage
The amount you pay for your employee health insurance is based on your salary and the premiums you choose. That can make it seem like group coverage costs more than individual coverage, but that’s not necessarily true. First, there’s the cost of administration. One of the highest costs of group coverage is managing the plans, including overseeing the claims process, paying claims and administering the plan’s benefits.
These administrative costs can be higher with group plans, but they’re primarily found in large organizations. Next, consider how much you save on employee health care costs. Since you’re paying a fixed amount for every employee in the plan, you’ll save money instead of paying for each employee’s medical expenses directly.
You can’t be fully covered under a group plan
All those employees in the group health plan trust are entitled to coverage. But when they get sick, they’re limited by their plan’s benefits. If an employee has a serious health condition, he’ll need treatment. However, to save money, he might have to leave work early, skip a few days of work or work from home. If he doesn’t have enough time off to get a care appointment or treatment, he could end up with a severe illness and end up needing expensive care he can’t afford or skip out on an ample job opportunity, costing him even more.
Group plans have exclusions, too
All policies have exclusions. You probably know about the most common medical exclusions, like “you can’t get backhand Somersaults” or “no routine care for lice.” But some group plans have more serious exclusions — like exclusion for treatment for herpes, HPV, or HIV/AIDS. You need to know what your plan’s rules are before you sign up anyone for coverage.
Group health insurance is great for teams that regularly need medical care
If your company provides uniforms, tools and training to a construction team, or a food truck team, and you have regular team-building events, team health coverage could be a great fit. This kind of coverage is often called “bronze” health coverage because it’s the second level of coverage most companies choose.
Group plans don’t help when you’re healthy, either. Be sure your employees are covered too
If your company offers group coverage, you might assume that it’s automatically included in your benefits. But your benefits might be handled through a separate plan or reserved for executives or other “key” employees. If you don’t have group coverage, you might not get your full benefits if you get hurt or get sick. Even if you get hurt and go to the doctor, the medical bills could be sent to your insurance company, not paid directly by your insurance company.
Plan termination fraud is a big problem with group coverage. Be vigilant and protect your money
If you have a large group health plan that is being terminated, it could be a sign that the company is going out of business. Before you sign up employees for the plan, make sure it’s the real deal and not one of the many plans set up for “plan termination fraud” by unethical businesses that want to avoid paying claims.
Group plans don’t pay for all medical visits and care — read your policy before you sign up.
One of the significant benefits of group health coverage is that it’s often cheaper than individual coverage. But just because a plan costs less doesn’t mean it’s the right option for you and your family. You should carefully consider the benefits most important to you and your family.
The bottom line
Group health coverage can be a good option for businesses with regular, scheduled team-building activities. If that’s the case, you should carefully consider the pros and cons of group coverage and shop around to find the best deal. When you’re done, ensure you’re informed and empowered to make the best decision for your company. GMC is a great way to help employees who need medical care. But like standard individual health insurance, group plans have their own unique pros and cons. Make sure you are well-versed what they are before you sign up for your team.