Group health insurance plans offer many benefits to the employers and employees that use them. An employer usually offers these policies. Read on to understand more about what group health insurance is and how it benefits businesses.
Group Health Insurance: What it is and How it Works
Group health insurance plans are generally offered to a group of people whom the same organization or employer employs. There are two types of group health insurance:
- Insurance plans for people employed by an organization
- Insurance plans for members of an organization
One of the most significant advantages of group health insurance is that the costs are generally lower than other types of insurance, mainly because the costs and risks associated with the care can be spread equally amongst the participating group.
Group Health Insurance vs. Individual Health Insurance
So, how does group health insurance differ from individual insurance? What makes group health insurance plans more beneficial than individual health insurance? Here’s a breakdown of how the process works.
- First, an organization, company, or business chooses and buys a group health insurance plan that’s appropriate for the size and needs of their group.
- Next, the plan is presented to company employees or organization members.
- Then, employees can either accept the coverage or decline it.
- Finally, the plan’s premiums are split between the business and the plan members. Because there’s a large group for the risks to spread across, the costs actually end up being much lower than individual plans because there are a higher number of people to spread the risk across.
In addition to lower premiums, businesses generally receive tax benefits for offering group insurance plans to employees and members.
Benefits for Employers
It’s important to understand the benefits of group health insurance before you decide whether it’s right for you. Here are some of the ways in which it benefits employers:
- Keeps employees happy and healthy
- Allows employers to save during tax time
- Helps employers attract and retain quality talent
- Boosts goodwill
- Provides value for the money
Benefits for Employees
- Affordable
- Covers families
- A good motivational tool
- Easy claims process
- Plans provide value for money
- Most plans cover pre-existing diseases
- Most plans do not have a waiting period