Not all the people have coverage by an insurance plan. For many years, these people were forced to pay for their healthcare on their own. But now, the time has changed.
A group health insurance is a plan that covers more than one person for their medical expenses. These groups can be employees of a company, a family or members of an organization. These insurance plans are usually low-cost as the risk is reduced by spreading across all the policyholders.
Such plans are designed to save money for businesses as these plans are less expensive as compared to the traditional individual health plans. As the premiums are pre-tax, it saves the organizations from higher annual taxes and allows them to save more money on a larger scale. The income taxes of the employers can be reduced as they have to pay lower payroll taxes.
How Does It Work?
Usually, different companies and organizations buy these group insurance plans and distribute them to their employees. These plans can only be availed by a group, an individual cannot buy such a plan and enjoy the benefits. There is a plan to plan differently for what will be covered and what will be not. Companies pay for medical expenses, hospital visits, preventive treatments, and drugs for long-term as well as short term periods. It also covers emergencies like injuries and unexpected diseases.
The amount that will be paid by the company depends on the type of plan, there is a chance that the company will copay $30 for each visit to the doctor. In short, the employees having higher premiums will have lower deductibles.
The premiums for this type of insurance plans are generally higher than that of an individual plan in the marketplace as more people buy the group plan and increase the business of the organizations. A plan with higher premiums will allow you to pay lower deductibles and similarly if you are paying fewer premiums, you will have to pay more deductibles.
Benefits of Health Insurance Plans
The first and foremost advantage of buying a group health insurance plan is that the risk is distributed among different individuals. It helps the insurer get a clear idea of the coverage and also the members of the group be lowering the premiums. The insurance organization can even have more control by HMOs (health maintenance organizations) in which the providers will deliver healthcare to the members of the policyholder group.
This model by HMOs reduces the cost but removes the flexibility and independence of the policyholder. On the other hand, PPOs (Preferred provider organizations) allows more choice for the individual, they can pick their doctor, hospital and have access to the specialists. The limitation on this one is that it has higher premiums.
Most of the group health insurance plans are sponsored by employers. But, in case you want to buy a group insurance plan on your own, you can buy it through an organization. You can buy such a plan from many associations, including the Americal Association of Retired Persons (AARP), wholesale membership clubs and freelancers unions.