For the majority of Americans, access to health care coverage is through a group insurance plan. Like group life insurance, group health insurance is unique in the way it is bought, underwritten, and priced. All eligible employees must be offered coverage in a group plan.
Group health insurance is provided through a group insurance contract issued to the group plan sponsor – in most cases the employer. While an individual policy covers one individual or family, a group contract can cover many people. As the policy’s applicant and owner, the sponsor selects the plan benefits and is issued a master policy or a master group contract.
Eligible groups must be a natural group, in other words a group cannot be formed for the sole purpose of buying health insurance. Some of the factors that are looked at when a carrier is evaluating a group application may include the following:
1) The business or industry the group is engaged in.
2) Age and gender of participants.
3) Number of people in the company’s specific job class.
4) Any prior claim history.
5) Who is eligible and if there should be a waiting period
6) Turnover of employees.
7) Minimum participation level.
Contributory and Non-contributory plans.
A non contributory plan is one in which the employer pays the full amount of the premium. If the plan is noncontributory, 100% of eligible/full time employees must be covered in the plan. A contributory plan means the employee must pay part of the premium. If the plan is contributory 75% must participate. These provisions are added to avoid adverse selection as the underwriter fears low participation means the high risk employees are staying in the plan and the young, healthy, low risk people are opting out.
If you would like to learn more about group health policies, please contact Insurance for Veterans at 803-250-3709 or by email at firstname.lastname@example.org.