When you are first offered group health insurance through your employer you will probably question whether it is the right insurance option for you. There are other options available to young people at various costs, and while insurance at work provides good coverage at a reasonable price, there are also some drawbacks.
What is Group Health Insurance?
Group insurance is a way for employers to provide health insurance to their employees at a single rate. Instead of each employee having his or her own rate based on demographics, the group as a whole is rated together. Depending on the size of the company, the rate is based on claim experience, the insurance company’s book of business experience, or a blend of both.
Employers usually help offset some of the cost of a group plan by not requiring employees to pay the full cost of the premium. The Patient Protection and Affordable Care Act (PPACA), or Obamacare as it is frequently called, sets limits on the monthly contribution employers can require employees to pay in a group health insurance plan without the employer facing a steep fine.
What is Good About Group Health Insurance?
As mentioned above, perhaps the best thing about a group insurance plan is that the cost is not as high as if you bought an insurance plan on your own on the individual market. Employers almost always pay a heavy portion of the employee only premium. It depends on the company as to how much they will pay for dependent coverage.
Group medical insurance plans will also include robust plans. The Affordable Care Act requires coverage for certain essential benefits. There are also caps on the out of pocket expenses that these plans can force employees to pay.
Employers use benefit brokers and consultants to help set up their packages and leverage the insurance companies for the best plans and rates available. This helps keep costs down for everyone.
With group insurance, there are several entities that have an interest in keeping the cost of the plan as low as possible. Because of this, many plans have robust case management programs to help employees get the most effective care possible when there is a significant medical need.
What are the Limitations of Group Health Insurance?
With a group plan the employee is stuck with the options that the employer has chosen. A lot of thought goes into the benefit decisions, but the plans are not the best way for all employees to meet their budgetary and medical needs. Maybe you’d like a lower deductible. Or maybe you’d like lower premiums. With an employer based plan, you must choose what your company has chosen for you.
Employers do not always pay very much of the premium for coverage for a spouse or children. Even with the subsidy that your company pays for your coverage, it may still be less expensive to go elsewhere to find a family plan.
Doing a cost-benefit analysis can help determine if a group health insurance plan is right for you. Before enrolling, make sure to check out your other options on the individual market or health insurance exchanges. There are good options available.