April 24, 2013
The Ins and Outs of Group Health Insurance
Q. What advantages are there by belonging to a group plan?
Well for one, in most cases, your employer will pay most of your monthly premium if not all of it. More money in your pocket is good… You’ll still be responsible for copays and coinsurance but your definite costs are being paid for by the group policy.
Secondly, group plans are guaranteed issue. Meaning, the insurance carrier can’t deny one particular employee due to a preexisting condition. This is good as well.
Therefore, group plans are ideal for businesses that want to attract talented employees by offering them health insurance at no cost. It entices the potential employee to your company over someone else’s.
Q. What disadvantages are there in a group plan?
Some companies will deduct money from your payroll in order to pay for your health insurance policy. Though, if it is only part of the cost, you’re usually better off staying in the group.
In addition, some group plans don’t have the rich benefits that Medicare has. This means that not only is it a lot cheaper for employees over the age of 65 to be on a Medicare approved plan (instead of the group plan), but the monthly premiums, deductible, copays and coinsurance can be a lot more expensive with a group plan. Essentially, you’re paying more and getting less. For this reason many seniors who are still working will disenroll from their group plan and enroll into Medicare along with a Medicare Advantage or supplemental policy (see my blog relating to Medicare Advantage vs. Supplement - or email me directly).
Q. What is the definition of a group health insurance plan?
A group health insurance plan is a policy for two or more people who are connected not for the sole purpose of getting a group health policy. They either belong to a club or, in most scenarios; they work for the same company.
Anyone in the group can apply. It is illegal to discriminate against anyone in the plan for any reason. All must be afforded the option.
Q. What is the SHOP?
The SHOP is the Small Business Health Options Program. It is a government exchange that will go live three months before 2014 so that small businesses (under 50 employees) can shop for group health insurance plans. Some businesses may get a 50% tax credit for going through the exchange!
Q. Who in 2014 must provide a group health plan for their employees?
In 2014 any company with more than 50 employees must provide AFFORDABLE health insurance to their employees. If they do not provide affordable health insurance the company will be penalized for each employee after their first thirty employees.
Please comment with any questions or feedback you’d like to share…
All the best,