Group Health Insurance
What is Group Health Insurance?
If you just started a new job and want to learn more about how your new group health insurance works, congratulations! If you just want to find out about the group health coverage you already have, or you recently lost your job and want to know what your coverage may look like until you find a new one, you’ve come to the right place. These basics will help make sure you know what you’re getting into, what you need to know, your costs, and other facts and benefits along the way.
Group health insurance is often called employer-based coverage because it is directly tied to your employment status. Members of a group health insurance plan usually pay a bit less than other plans. Why? Because the risk to the insurer is distributed across multiple members, they can afford less liability.
Group health insurance is federally regulated. Under the Affordable Care Act (ACA), to avoid paying a penalty fee, businesses must provide their employees and their families with some type of group plan. If the company has less than 50 full-time employees, these standards are a bit different. But, if a company has even two employees, insurers are also required to provide group coverage.
The company/organization/employer chooses the group health plan to distribute to its employees. In most states, a group insurance plan is required to have a 70% participation rate but may vary in some states. This is to ensure that your employer offers valuable, necessary coverage to its employees, rather than making it completely unnecessary, over-expensive, or useless.
Who it Covers
Like all insurance policies, you must be eligible in order to enroll in a group health plan. For group health insurance, you must be an employee on the company payroll, and the employer must pay payroll taxes. Employees who are on unpaid leave are often ineligible for group coverage until they return to work. There may be other options for health insurance in this gap, especially if you experience a disabling injury or incident that keeps you from working for an extended amount of time.
Independent contractors, retirees, seasonal, or temporary employees are typically not eligible for group health insurance. Why? Because they are not currently or extendedly working with an employer for the coverage. If this is your circumstance, you can likely purchase an independent health insurance plan.
Group health insurance must also have options to cover an employee’s spouse and dependent children until age 26. Some employers may choose to expand the age definition for child dependents depending on the situation — if an employer extends health benefits to unmarried partners, that coverage must mirror the coverage extended to spouses on the same plan.
Group Health Insurance Terms
When you sign a group health insurance contract, especially if you are signing up for a new one for the first time, you’ll likely bump into many terms you don’t know. Or, if you are reviewing information for a plan you’re currently enrolled in, this refresher can remind you of the different parts of your plan, especially if costs are automatically deducted from your paycheck, as these facts can easily be forgotten.
An insurance premium is a monthly fee you have to pay to keep your coverage. If you miss your premium payment, you should have a roughly 3-month grace period to make up the lost month(s). Your employer may also have provisions in place against this. But, if you fail to make payments, you may lose your coverage. However, premiums are typically taken out of your payments automatically by your employer, so you shouldn’t have to worry about this.
A deductible is a one-time yearly fee. When you use a benefit from your group health plan for the first time that year, you’ll pay your deductible once, then not have to worry about it for the remainder of that year. If you don’t use any benefits for the year, you won’t have to pay it.
When you do receive a benefit, your group health plan may not cover 100% of its cost. This is called cost-sharing — if your plan covers 80% of the cost of a benefit, you will have to cover the remaining 20%, and so on.
Group health insurance plans also cover dependents. A dependent is a person (your child) under 26 years old that is or was a member of your household. As long as you are willing to pay the additional cost to your premium, you can keep dependents up until that age even when they move out.
COBRA is an important term to know in case you lose your job. Congress passed the Consolidated Omnibus Budget Reconciliation Act (COBRA). This allows employees who lose their jobs, for a limited amount of time, to buy group health coverage for themselves and/or their families. Under COBRA, your employer must provide the same health insurance for a bit. However, if your employer helped with some of your insurance costs, they won’t anymore, and you’ll be responsible for the full cost for the time being.
Group Health Insurance Costs
The average premium cost per individual in a group health insurance plan was $409 a month. Small group health plans had an average deductible of $3,140. As mentioned earlier, you can add family members and dependents to your plan at an additional cost.
When your premium is deducted from your paycheck, it is taken out pre-taxes. This means that only your income without your premium is taxed. Think of it this way — if the average income tax rate is 13%, would you rather take 13% of your total paycheck or 13% of your paycheck minus your $400 premium?
How and Where to Sign Up
When hired at a new job, you should ask about an enrollment deadline. If you miss it and don’t get into your employer’s group health plan, you may have to wait for the annual open enrollment period to join. Your employer may also give you a waiting period, typically 90 days, before your coverage kicks in and you begin your payments.
If your situation changes (i.e. new child, marriage, spousal changes, etc.), you can add new dependents to your plan and make coverage changes during an open enrollment period. You can add coverage offered by some employers, or apply for supplemental coverage like dental, vision, and/or pharmacy.
If you’re self-employed, you may still be able to buy group health insurance for your company in certain states. You may be able to purchase a group policy for your company with just one active member/employee.
Group Health Vs. Individual Health
Group health insurance isn’t your only option if you’re employed. You can instead opt for an individual health insurance plan. You can also purchase an individual plan regardless of your employment status.
You have a few more coverage options with an individual plan because you can search and choose from all available plans in your area to find one that covers your preferred healthcare providers. With employer plans, your options may be limited to what the employer chooses.
You can keep your plan even if you lose your job, which isn’t necessarily the case with group health insurance as described above.
Employee plans can be paid pre-taxes, while individual plans are not. Group plans reduce your taxable income, while individual plans do not.
Individual plans may be government subsidized, meaning that you will receive help with costs. Employers will often contribute to the cost of a group health plan. Both, then, may have some help with your payments. Individual plans may also cost more, but may not depending on your situation.
Group Health and Medicare
Medicare is typically reserved for those ages 65 and up. It is health insurance for when your group health insurance ends at retirement. But what if you haven’t yet retired, or you still receive group health coverage through your former employer?
If you still have group health insurance when you become eligible for Medicare, you have a few options. You can drop your group health plan and fully switch over to Medicare. Or, you can keep your group health plan and delay Medicare enrollment. As long as you have your employer coverage, you won’t be charged a Medicare late enrollment fee.
Or, you may keep both plans. If your employer plan has more than 50 members, it will be your primary insurer, while Medicare will be your secondary. If it has less than 50, Medicare will be the primary. You will have to pay both premiums and deductibles, but with both plans active, you will likely pay nothing for your healthcare.
Don’t Settle for Confusing — Call Affordacare Insurance
We want to make sure you know your coverage. From your costs and benefits to enrollment and any questions, we’re here for you. Call Affordacare Insurance today.