Businesses offering group health insurance benefits are more likely to recruit and keep the best employees. Unfortunately the cost of providing group health coverage has risen greatly over the past several years. Employees often question the benefits of a group health insurance plan versus an individual health insurance plan. Employees often wonder how a group insurance plan works, if it will cover a preexisting medical condition, and what happens to the group health insurance plan if a company goes out of business. These answers and more will be answered here.
What advantages does a group health insurance plan have over an individual health insurance plan? With a group health insurance plan, it is assumed that the risk is spread out over a large group of people, allowing the premiums to be much lower than with an individual health insurance plan. For example, if an employee is covered by an individual health insurance plan and gets sick, there is no other healthy person paying premiums on that plan. On the other hand, if an employee is covered by a group health insurance plan and gets sick, there are still several other healthy employees who are still paying the premiums. The risk is spread over a larger group of people. Therefore, more services are usually offered or are more affordable under a group health insurance plan than under an individual health insurance plan.
What happens to the group health insurance coverage if an employee is fired or retires? Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), continuation of health insurance at group rates allows the temporary continuation of benefit for former employees, spouses, dependent children, retirees, and former spouses if coverage is lost because of job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. An employee can continue their current group health insurance plan under COBRA, but they have to pay both their portion and the company’s portion of the health insurance premium. Under COBRA, the employee will pay much more for group health insurance, but full coverage will remain in effect.
What is primary and secondary coverage? This coverage happens when two individuals in a family, such as husband and wife, are covered under a group health insurance plan. To avoid dual coverage and overpayment for a covered procedure, insurance companies will establish primary and secondary coverage. Primary coverage is typically the plan an individual has been with the company the longest and will pay for a covered procedure up to the limit provided by that plan. Secondary coverage is coverage as a dependent under a different plan and will pay for a covered procedure after the maximum has been paid under the primary coverage.
If I have a preexisting medical condition, am I eligible to join a group health insurance plan? Any physical or mental condition that an employee has prior to joining a group health insurance plan is called a preexisting medical condition. Unfortunately, most preexisting medical conditions are not covered by a new insurance policy and coverage can even be denied because of such a condition. There are exceptions to every rule, and that applies to preexisting medical conditions also. For example, some insurance companies consider pregnancy to be a preexisting medical condition but they are required by law to provide coverage to women who have been pregnant.
What happens to my group health insurance coverage if my company goes out of business? Unfortunately, there is not much an employee can do if their company goes out of business. Once a company ceases to exist, the group health insurance also ceases to exist and all employees will have to find another form of insurance. Many insurance companies will work with these employees to help them find an individual health insurance plan, but the costs for an individual plan will be more expensive than the group plan. The only option to enroll in group health insurance would be for the employee to find a new job that offers group health insurance benefits.