Decker Benefits Solutions

Group Health Plans

Group health plans vs. Individual health plans

As opposed to individual health plans, Group health plans are cheaper because the risk is spread among several members. Currently, the premiums may be split between the employer and the employees. This means that there is a certain percentage that the employer contributes towards the premium making it less expensive for all parties.

Under a group health plan, medical care benefits are only available, as long as the person is an employee of the company or a member of the group. When they leave the company or the organization, such benefits cease to continue. Individual health plans on the other hand, do not cease just because a subscriber has changed jobs.

The employer or the employee's union, pays the premiums to the plan provider, on behalf of the employees or the group members. Consequently, the members are deducted a portion of their annual salary. Under an individual health plan, the subscriber pays premiums directly to the insurance company. He makes a personal decision to purchase the coverage for himself or his family.

Group health plan definition

Group health plans is a common employees welfare benefit that exists in many companies, organizations and people working for the government. The medical benefits are purchased by the employer, the employees’ organization or the plan sponsor and are an entitled to all the members of the organization.

In a group health plan, the health care benefits are uniform. Whereas, in an individual health plan, the subscriber selects a plan that is unique to him or her.

The term Group health plan is often incorrectly used to refer to group insurance plans. Whereas, a group health insurance plan refers to the group medical cover. Group health plan is an umbrella term that refers to a number of group health care benefits.

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Group Health Plans

What is group health plans

A group health plan may constitute a medical cover that may be offered directly or through an insurance company. This is referred to as a group health insurance plan. It also refers to the medical cost reimbursements to employees or the members of a select group.

An employer or the plan sponsor may either choose a self- insured group health plan or a fully insured group health plan. A self insured type is a group health plan operated by the company itself. The fully insured health plan is purchased from an insurance company, and then is given to the members or employees of an organization.

Even though benefits may be uniform to members, there may be differentiation of benefits among the different job classifications. Managers may have more health benefits coverage, as opposed to the janitors working in the same company.

Characteristics of group health plan

  • Benefits are uniform among the members.
  • Benefits received are tax -free
  • Premiums paid on behalf of members are fully deductible
  • Cheaper premiums because the risk is borne by more persons
  • May be in form of a medical insurance cover
  • May take the form of reimbursement
  • Employers may choose a self- insured plan or the fully- insured group health plan
  • Group health insurance plan is a type of a group health plan
  • Members are deducted a compulsory fee towards premium contributions
  • Group health plans are either self-insured or fully insured.
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