Are you a business owner, executive, or HR decision-maker in Arizona who’s looking for the right insurance plan for your workforce? If so, you have various structuring options to consider, with each offering a different mix of upsides and downsides for both the company and its employees. Roses Insurance Group has the answers you’re looking for, as well as attractive plans to meet a wide range of needs. Contact us today to learn more during a free consultation.

Understanding Group Health Plans

A group health plan is a type of health insurance plan sponsored by an employer or organization (such as a union) that offers health coverage to employees or members (participants) and their dependents. By covering a large number of people, group health plans can offer lower premiums while providing better coverage because of shared costs compared to individual health insurance plans. In most cases, employers will cover some or all of the premiums their employees would otherwise pay for coverage under the plan. 

Sponsors can choose between fully insured and self-insured group health plans. In a fully insured plan, the sponsor pays a premium to a third-party insurance company that covers participants’ claims. In a self-insured plan, the sponsor pays participants’ claims from its assets and revenue. In most cases, only employers or organizations with over a thousand employees or members can cost-effectively self-insure. Smaller companies typically obtain insurance through a third-party insurer. 

Group Health Plans vs. Individual Health Insurance

There are several key differences between group health plans and individual or family health insurance policies purchased through the federal marketplace or a state marketplace. First, group health plans are purchased by an employer or organization, which, alternatively, could provide the plan by self-insuring. On the other hand, individual or family plans are purchased by the policyholder directly from the insurer. The upshot is that, because group health plans can spread costs and risk among a large group, they can offer lower premiums. 

Group health plans also allow the sponsor to contribute toward each plan participant’s premium, further lowering each participant’s healthcare costs. Policyholders of individual plans must pay the full premium, although some individuals and families may qualify for federal tax credits that offset some or all of their premium costs. 

Employer Contributions and Employee Costs

An employer may contribute to premium costs under its group health plans either by paying a specific percentage of each participant’s premium or by paying a fixed dollar amount per participant. 

Employees’ healthcare costs under a group health plan fall in several categories:

  • The employee’s share of their monthly premium
  • The employee’s deductible, or the amount of money the employee must pay out-of-pocket for care before the insurer pays 100 percent of expenses
  • Copays, where an employee pays a fixed dollar amount out-of-pocket for healthcare expenses
  • Coinsurance, where an employee pays a percentage of the cost of a service out-of-pocket

Common Types of Group Health Plans

The following are three of the most common types of group health insurance plans:

  • Preferred provider organization (PPO): A PPO gives plan participants the flexibility to obtain care from in-network or out-of-network providers, although participants will have lower out-of-pocket costs for in-network care. Furthermore, participants can obtain specialist care without a referral from a primary care doctor. 
  • Health maintenance organization (HMO): With an HMO, plan participants must obtain care from providers within the HMO’s network, except for needed emergency care. Furthermore, participants typically need a referral from their primary care doctor to see specialists, except for routine preventive screenings. HMOs offer lower premiums at the expense of covering care only when obtained from in-network providers, unless the insurer provides pre-approval for an out-of-network procedure.  
  • High-deductible health plan: A high-deductible health plan offers lower premiums compared to other types of group health plans by requiring higher deductibles for plan participants. In most cases, the plan allows participants to pair their coverage with a health savings account (HSA) to help cover their deductible. HSAs enable individuals to save money pre-tax and use those funds to pay for qualified medical expenses. 

Dependent Coverage

Group health plans provide insurance coverage not only for employees or members but also for their dependents. Dependents eligible for coverage include spouses, children (including adopted children), and, in most cases, stepchildren. Federal law requires group health plans to cover participants’ dependent children, adopted children, and stepchildren until the month in which they turn 26.

Obtaining Coverage 

The sponsor of a group health plan can set an open enrollment period, usually lasting several weeks, during which employees or members can enroll in the plan or change their coverage. Outside of the open enrollment period, a group health plan may offer special enrollment that allows employees and their dependents to enroll in coverage under certain qualifying circumstances, such as: 

  • Loss of other insurance coverage
  • Changes in dependents, including marriage, divorce, birth or adoption of a child, or placing a child in an adoptive home
  • Moving to a new address that provides access to different plan options

COBRA Continuation Coverage 

Federal law gives group health plan participants and their dependents the right to continue receiving benefits under their group plan if they lose coverage for certain reasons, such as:

  • Job loss
  • Reduction in work hours
  • Transition between jobs
  • Death of a plan participant
  • Divorce from a plan participant

The law also requires employers with 20 or more employees to offer temporary extensions in health coverage from a group health plan in qualifying circumstances when coverage would otherwise end. Participants or dependents usually have 60 days from the termination of employer- or organization-sponsored benefits to elect COBRA coverage, although once elected, coverage retroactively applies to the day after the sponsored coverage ended. 

COBRA continuation coverage typically requires an individual or family to pay the entire group health plan premium (including any portion previously contributed by a sponsoring employer or organization), plus a two-percent administrative fee. 

COBRA coverage can last between 18 and 36 months, depending on the circumstances. It is meant to ensure that individuals and their families have continuous health coverage when they switch employers, transition to self-employment and purchase coverage through the state or federal marketplaces during open enrollment, or retire and transition to Medicare.

Contact Us Today to Learn More About Group Health Plan Offerings

Are you interested in establishing a group health plan for your company’s workforce? Then contact Roses Insurance Group today for an initial consultation with our team to learn more about group plans, how they work, and whether they might be right for your business. We’re proud to serve Pima County, Southern Arizona, and beyond, and we look forward to meeting you soon.

Group Health Plans

Are you a business owner, executive, or HR decision-maker in Arizona who’s looking for the right insurance plan for your workforce? If so, you have various structuring options to consider, with each offering a different mix of upsides and downsides for both the company and its employees. Roses Insurance Group has the answers you’re looking for, as well as attractive plans to meet a wide range of needs. Contact us today to learn more during a free consultation.

Understanding Group Health Plans

A group health plan is a type of health insurance plan sponsored by an employer or organization (such as a union) that offers health coverage to employees or members (participants) and their dependents. By covering a large number of people, group health plans can offer lower premiums while providing better coverage because of shared costs compared to individual health insurance plans. In most cases, employers will cover some or all of the premiums their employees would otherwise pay for coverage under the plan. 

Sponsors can choose between fully insured and self-insured group health plans. In a fully insured plan, the sponsor pays a premium to a third-party insurance company that covers participants’ claims. In a self-insured plan, the sponsor pays participants’ claims from its assets and revenue. In most cases, only employers or organizations with over a thousand employees or members can cost-effectively self-insure. Smaller companies typically obtain insurance through a third-party insurer. 

Group Health Plans vs. Individual Health Insurance

There are several key differences between group health plans and individual or family health insurance policies purchased through the federal marketplace or a state marketplace. First, group health plans are purchased by an employer or organization, which, alternatively, could provide the plan by self-insuring. On the other hand, individual or family plans are purchased by the policyholder directly from the insurer. The upshot is that, because group health plans can spread costs and risk among a large group, they can offer lower premiums. 

Group health plans also allow the sponsor to contribute toward each plan participant’s premium, further lowering each participant’s healthcare costs. Policyholders of individual plans must pay the full premium, although some individuals and families may qualify for federal tax credits that offset some or all of their premium costs. 

Employer Contributions and Employee Costs

An employer may contribute to premium costs under its group health plans either by paying a specific percentage of each participant’s premium or by paying a fixed dollar amount per participant. 

Employees’ healthcare costs under a group health plan fall in several categories:

  • The employee’s share of their monthly premium
  • The employee’s deductible, or the amount of money the employee must pay out-of-pocket for care before the insurer pays 100 percent of expenses
  • Copays, where an employee pays a fixed dollar amount out-of-pocket for healthcare expenses
  • Coinsurance, where an employee pays a percentage of the cost of a service out-of-pocket

Common Types of Group Health Plans

The following are three of the most common types of group health insurance plans:

  • Preferred provider organization (PPO): A PPO gives plan participants the flexibility to obtain care from in-network or out-of-network providers, although participants will have lower out-of-pocket costs for in-network care. Furthermore, participants can obtain specialist care without a referral from a primary care doctor. 
  • Health maintenance organization (HMO): With an HMO, plan participants must obtain care from providers within the HMO’s network, except for needed emergency care. Furthermore, participants typically need a referral from their primary care doctor to see specialists, except for routine preventive screenings. HMOs offer lower premiums at the expense of covering care only when obtained from in-network providers, unless the insurer provides pre-approval for an out-of-network procedure.  
  • High-deductible health plan: A high-deductible health plan offers lower premiums compared to other types of group health plans by requiring higher deductibles for plan participants. In most cases, the plan allows participants to pair their coverage with a health savings account (HSA) to help cover their deductible. HSAs enable individuals to save money pre-tax and use those funds to pay for qualified medical expenses. 

Dependent Coverage

Group health plans provide insurance coverage not only for employees or members but also for their dependents. Dependents eligible for coverage include spouses, children (including adopted children), and, in most cases, stepchildren. Federal law requires group health plans to cover participants’ dependent children, adopted children, and stepchildren until the month in which they turn 26.

Obtaining Coverage 

The sponsor of a group health plan can set an open enrollment period, usually lasting several weeks, during which employees or members can enroll in the plan or change their coverage. Outside of the open enrollment period, a group health plan may offer special enrollment that allows employees and their dependents to enroll in coverage under certain qualifying circumstances, such as: 

  • Loss of other insurance coverage
  • Changes in dependents, including marriage, divorce, birth or adoption of a child, or placing a child in an adoptive home
  • Moving to a new address that provides access to different plan options

COBRA Continuation Coverage 

Federal law gives group health plan participants and their dependents the right to continue receiving benefits under their group plan if they lose coverage for certain reasons, such as:

  • Job loss
  • Reduction in work hours
  • Transition between jobs
  • Death of a plan participant
  • Divorce from a plan participant

The law also requires employers with 20 or more employees to offer temporary extensions in health coverage from a group health plan in qualifying circumstances when coverage would otherwise end. Participants or dependents usually have 60 days from the termination of employer- or organization-sponsored benefits to elect COBRA coverage, although once elected, coverage retroactively applies to the day after the sponsored coverage ended. 

COBRA continuation coverage typically requires an individual or family to pay the entire group health plan premium (including any portion previously contributed by a sponsoring employer or organization), plus a two-percent administrative fee. 

COBRA coverage can last between 18 and 36 months, depending on the circumstances. It is meant to ensure that individuals and their families have continuous health coverage when they switch employers, transition to self-employment and purchase coverage through the state or federal marketplaces during open enrollment, or retire and transition to Medicare.

Contact Us Today to Learn More About Group Health Plan Offerings

Are you interested in establishing a group health plan for your company’s workforce? Then contact Roses Insurance Group today for an initial consultation with our team to learn more about group plans, how they work, and whether they might be right for your business. We’re proud to serve Pima County, Southern Arizona, and beyond, and we look forward to meeting you soon.