Group health insurance can reduce the cost of routine doctor visits.
Health insurance is an effective way to guard yourself against the high cost of medical care should you or someone in your family require emergency treatment or ongoing care. Each type of health insurance is subject to the guidelines that insurance companies and governments enforce. Group health insurance, also known simply as group insurance is a form of health insurance that's available to the members of a specific group, such as employees of a company.
Function
Group health insurance pools the members of a group and requires them to each pay the same amount for the same level of coverage, regardless of age, gender or any other factor. Employers can choose to pay for some or all of the cost of group insurance that they offer as an employee benefit. In other cases, members of the group pay for the full cost of the policy, which may still be below what an individual plan would cost from a private insurer. A wide range of private insurers offer group insurance in addition to individual plans.
Sources
Employers are among the largest providers of group health insurance. They purchase the policies directly from private insurers or serve as an intermediary between the insurer and employees. Insurance companies also offer group plans to members of certain social and civic groups. For example, membership in an automobile club may make you eligible for group insurance.
Eligibility
The first criterion for eligibility in a group insurance plan is membership in a group that has a working relationship with an insurance company. Beyond this, members who buy insurance must continue to pay their premiums on time and continue their membership, which may mean remaining with the employer that offers the insurance. Group insurance programs offer periods of open enrollment, in which new and existing members can buy into the plan or change their plans. Health status is generally not a factor in determining eligibility, since the insurance company spreads insurance risk factors over the entire group.
Drawbacks
Group health insurance isn't the best option for everyone. Because all members of the group pay the same price for the same coverage, those that are less likely to make claims are at a disadvantage compared to anyone who is more likely to make a claim and receive an insurance payment because of age or a preexisting health condition. Group insurance can also prevent employees from moving to another employer because of the fear of losing coverage.
Alternatives
Full-time employees who receive group insurance as a benefit may have little need for other forms of insurance, but anyone who doesn't have access to health insurance as a member of a group needs to look elsewhere. Individual insurance plans feature premiums based on risk factors such as age, gender and preexisting conditions. For relatively healthy, young people, these types of plans can be a competitive option, even if group insurance is also available. Government programs, including Medicare for the elderly and Medicaid for low-income families, offer free or low-cost insurance based on financial need.
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