Understanding Group Health Insurance

Understanding Group Health Insurance

Group health insurance policies are often provided by businesses and other organizations of all sizes as a benefit to their employees to help offset the costs of medical, eye care and dental expenses. Group health insurance is intended to help keep insurance rates low to make coverage more affordable for more people and acts as a safety net if a costly medical emergency occurs. Usually the number of employees insured by the group health plan determines the premium that employees, employers or both in a co-pay arrangement, will pay for the coverage as well as the types of group health insurance coverage available to the employer. Group health insurance is generally classified into three different groups:

  • Small business group health insurance for companies with 2 to 50 employees which have predetermined group health insurance plans
  • Mid-size group health insurance for companies from 50 to several hundred employees which usually offers more plan choices than small business policies
  • Large group health insurance for companies with thousands of employees which, due to the amount of people covered, may allow an employer to have a health plan customized specifically for them by the insurance company

Types of Group Health Insurance Coverage

There are many different types of group health insurance policies on the market but the majority of group health insurance plans fall into two categories:

  • Health Maintenance Organizations (HMO’s) – Generally, HMOs are less costly to employers and employees, but restrictive in the network of health care providers that are available to members. Members can seek health care from providers outside the HMO’s network, but the costs will probably not be covered by the plan
  • Preferred Provider Organizations (PPO’s) – A PPO is generally more expensive to employers and employees overall, but gives members much more flexibility in selecting health care providers

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