Group Health Insurance

Over 60% of the people in the US who have insured medical coverage get their healthcare plans from benefits provided by their employers.  Of the many reasons that employers provide group health insurance, there are two that are primary.  One is that healthcare benefits are useful in attracting higher quality employees.  The other is that employers who provide the option of a comprehensive group healthcare plan for their employees tend to have a lower turnover of staff.  These are two great values for the employer. 

A group health plan is an insurance policy that is purchased by an employer.  The benefits are offered to employees that are eligible, and often the employees’ immediate family members.  The employer may provide the insurance benefits at no cost to the employees, and sometimes the costs are shared.  There are three basic types of insurance policies for employers.  They are for Sole Proprietors, Small Businesses, and Large Businesses.  Below is a description of these three categories.

Sole Proprietorship: A sole proprietorship is a business run by one person in whom there is no distinction between the owner and the business.  Hence the owner is the “sole proprietor.”  Some states allow sole proprietors to purchase small business group health coverage and some do not.  For instance, California does not allow a sole proprietor to qualify for a small group health plan.  In states that do not allow sole proprietors to purchase small business group health coverage, the owner has the option of purchasing individual health coverage.

Small Business Group Health Plan: Small business group health coverage is a health plan generally purchased by an employer with between 2 and 50 employees.  According to Federal mandates, no small business employer or any individual employee of that employer may be turned down by an insurance provider for group coverage.  In the insurance industry this requirement is called “guaranteed issue.”  Regarding this, an employer is allowed to “look back” at individual applicants’ medical histories for group coverage to discern if there were any pre-existing medical conditions prior to employment and group coverage application.  If there were, the employer may decide to exclude certain conditions from coverage for a period of time.  The existence of prior health insurance coverage may affect how long the condition may be determined as an “exclusionary.”

Large Business Group Health Plans: Large business group health coverage generally for companies with more than 50 employees.  There are a few major differences in the coverage.  For one thing a provider is not required to offer insurance to large groups on a guaranteed basis, and under this statute an insurance company may decide to deny or reject the applicant company based on its history of claims.  But once the policy is issued to an employer, all eligible employees must be allowed coverage, except for applicable exclusionary conditions.

All group insurance contracts, including small and large groups, must be renewed each year according to Federal mandates.  As long as the employer has not committed insurance fraud or any intentional misrepresentation or there is non-payment of premium, and has also complied with all terms of the insurance contract, renewal is at the discretion of the employer.

There are Federal regulations and individual state regulations that will determine the specifics regarding group health insurance.  Ask Chad Olsen, of SoCal Platinum Insurance to help you determine what kind of coverage will best suit the needs of your business.