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All About Group Health Insurance
It is estimated that more than 60% of the U.S. population that has health insurance receives their coverage through an employer that offers a group health insurance plan. It's no secret that employees value health insurance benefits, perhaps above all other benefits. Employers, on the other hand, like to offer comprehensive group health insurance as it tends to attract and retain qualified employees as well as reduces the company's turnover rates.
In most states, group health insurance is available to companies with 2 or more employees. Often the number of employees covered under the group health insurance plan determines the types of coverage available as well as the premium costs.
For example, companies with between 2 and 50 employees are typically classified as a small business. Such businesses are eligible for small business health insurance; however, each state has its own set of regulations that determines what business can be classified as a "small business". It’s interesting to note that some insurance companies will market a “group” health plan to a single individual that is self-employed. In such cases, it’s important to realize that these “one-man” groups may not qualify for the same regulations that apply to larger groups.
Companies will thousands of employees may have their group health insurance plans customized for them by a health insurance carrier. Some large corporations will even choose to self-insure, with the health insurance carrier responsible for administering the health plans.
The primary difference between individual and group health insurance is that the plans offered to individuals (and “one-man” groups in some cases) are not “guaranteed issue”. This is a significant difference and means that the insurance company cannot deny coverage due to preexisting medial conditions of any of the eligible employees. The insurance company is allowed to ask medical questions, but can do so only for purposes of assessing the premium to charge for the group health insurance coverage.
The costs of group health insurance premiums is typically split 50/50, meaning the employer will cover 50% of the premium costs with the employee responsible for the remaining 50%. Even though minimum employer contribution varies by state, these percentages have changed in recent years due to the dramatic increase in health insurance costs, with employees bearing an ever-increasing share of the total costs.
There are tax incentives available to both employers who offer group health insurance and their employees. Business owners can generally deduct 100% of the premium costs and can reduce their payroll taxes by offering group health insurance as part of an employee’s compensation package. Employees, on the other hand, can pay their share of the insurance premium with pre-tax dollars.
In an environment of ever-growing health care and health insurance costs, eligibility in a group health insurance is becoming critical for many employees. Even with paying a higher percentage of premium costs than in the past, employees still are better off financially (and receive greater choices) with group coverage than with an individual health plan. At the same time, business owners are fully aware that offering quality group health insurance creates a more satisfied, and therefore more productive, workforce.
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