Group Insurance Plans: An Ultimate Guide

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It’s incredible to think that the insurance industry as a whole in America was worth a staggering $1.4 trillion in 2021, measured in net premiums. Group insurance plans make up a crucial part of the industry since there are so many advantages they can offer.

Employees and employers can both benefit from various group insurance plans. These plans help employers attract top talent, along with boosting morale and saving money on insurance costs. Employees also enjoy affordable coverage without having to fend for themselves in the private insurance market.

With so much on the line, it’s important to find the right group insurance plans for your business. There are plenty of options on the table these days that it can be difficult to know what to look for though. 

To help, we created this guide to group insurance plans. Keep reading to find out how group plans can help employers and employees alike!

What is Group Insurance?

Companies and organizations can offer group insurance plans to their employees. They are insurance plans that can include a variety of insurance policy types within them. These types can include:

  • Health Insurance
  • Dental Insurance
  • Life Insurance
  • Dependant Life Insurance
  • Travel Insurance

One of the most common group insurance types that we see today is one that deals solely with health insurance. However, an employer should not feel limited by such plans, as the more they can offer to employees, the more they may be able to attract talent. 

Key Benefits of Group Insurance to Employees and Employers

Employees can benefit from group insurance plans because they may get reduced costs for their insurance options. Insurers often favor group insurance offerings as they can spread their risk over a group of policyholders. 

As we’ve mentioned, group insurance plans can help them to attract new talent into the company. Another employer benefit is they can gain tax benefits by offering group health insurance along with other insurance options to their employees.

How Group Insurance Plans Work

An organization or company will choose group insurance plans to offer to their employees. Individuals cannot purchase such plans for themselves, but instead, there are typically strict criteria of how many people should opt into these plans within an organization (often 70% or more of the workforce). 

Due to the many factors that determine group plans, you will notice that every plan you come across will look different. Employees can choose from various tier options that insurers offer for different levels of coverage. The insurer will split premiums according to factors connected to the individual employees and the organization. 

You will find that there are group insurance plans out there to suit different-sized businesses or organizations. For instance, you may find that some insurers may offer plans for companies with 1-100 employees. There are also other insurers that could offer plans for up to 3000 employees. 

Shopping around and doing your research is essential for any employer to find the best plans for their needs. Here you can check out this employer group insurance starter guide for more info on how to do this. 

Group Health Insurance Plans in Focus

Most employees might want health insurance above all others if they had to choose. So, instead of going into major detail with all the different insurance policies that you might consider, we’ll focus on one of the most prevalent ones: group health insurance plans. 

Let’s now take a deeper look into group health insurance plans. By understanding more about this plan type, you can gain a better idea of what to look for in other insurance types. 

Here are some things you should look for in a group health insurance policy:

Coverage Options

Some typical coverage benefits you should look for are things like inpatient treatment coverage, daycare treatment coverage, ambulance costs, and before and after hospitalization expense coverage.

You should also look for riders that insurers offer where an employee can choose to use add-ons to make their coverage more comprehensive. The more comprehensive a policy can be, the better chance you’ll be able to attract quality employees to your organization. 

Sum Insured

Insurers will allow you a maximum limit of the sum insured for the group. It makes sense that you opt for the best coverage within this limit for your staff. The reason for this is that if you and your staff were to get insurance on the open market, the costs are likely to be much larger than what you have to pay for group options.

For instance, medical inflation is something many people are having to deal with in American society. You can avoid this type of undesirable phenomenon by getting group health insurance. 

Premium Costs 

Your company or organization will pay for the premium costs. So when looking at group health insurance plans, it pays to compare as many premium costs as you can. 

One way to learn about a wide range of premium costs on the market concerning group health insurance plans is to get a broker. a broker will be able to get various quotes and also negotiate the premiums that insurers offer.

Just be sure that you don’t opt for super-low premium costs at the expense of limited coverage options. Again, we must stress that it makes more sense to get as comprehensive a plan as possible.

Members Covered Conditions

It’s best to try and get group health insurance that offers extensive coverage for many members of each employee’s family. We’re talking about coverage for spouses and dependent children, for example.

As an employer, If you don’t opt for the type of insurance, potential employees might look to work elsewhere. If an employee’s family is fully insured for their health, then you might also be able to retain employees for longer.

Sub-Limits on Coverage

Certain coverage features under group health insurance policies may have sub-limits. The most frequent sub-limits, for instance, are room rent sub-limits, which set a maximum for coverage in the event of inpatient treatment.

You should try to avoid sub-limits because they defeat the entire purpose of health insurance. Look for plans without sub-limits, particularly when it comes to room rentals.

If certain restrictions must remain, make sure they are broad enough to considerably offset the expenses. For instance, if your employees are eligible for maternity coverage under the plan, there will inevitably be a cap on that coverage (sub-limit). Choose policies with a higher coverage limit in these circumstances to ensure that a sizable portion of the expense is covered.


you should expect to see plenty of discounts available when it comes to group health insurance plans. Don’t see this as a gimmick but as an opportunity to save a lot of money. 

One of the main reasons why you’ll see so many discounts is because the group health insurance plan market is super-competitive. When you find the best discount, you can reduce your premium by a substantial amount.

Worldwide Coverage Needs

Some companies may need worldwide coverage in their group plan. This is a typical need for companies that have employees that travel a lot. When looking for a plan with worldwide coverage there are some things to be aware of. 

For instance, some plans only offer emergency coverage. This is the bare minimum and might not be adequate. If an employee gets sick abroad for an extended period, they are going to want non-emergency coverage too. 

Provider Freedom

Provider freedom is something to think about when looking for group plans. Some insurers will only let you use selected doctors and care providers. This is almost always the case with HMO plans. Such plans restrict you to a network of doctors and specialists.

It may cost a lot to have total freedom though where your employees can choose whichever medical specialist they want. A good happy medium is to find a plan where you are satisfied with the medical professionals available to you and your employees. 

Who Is Eligible for a Group Health Insurance Plan?

Employees must be paid by their employer and subject to payroll taxes in order to qualify for group health insurance. Independent contractors, retirees, and seasonal or temporary workers are among those who are typically ineligible for group insurance. Employees on unpaid leave tend to lose their eligibility for coverage until they resume their jobs.

Employers must extend group health insurance coverage to a spouse and dependent children up to the age of 26 for any employee. Partners of the same or different sex may also receive health benefits from employers, even if they are not married. But such coverage must be equivalent to that provided to couples under the same plan.

How Employees Can Enroll in a Group Plan

If your workplace offers a group health insurance plan (group employee insurance), find out when you must sign up after they employ you. You could have to wait until the company’s annual open enrollment period if you miss the deadline.

Some businesses may impose waiting periods of around 90 days before health insurance coverage begins for new hires. During this period, you won’t need to pay premiums, but you also won’t have access to health insurance.

Different levels of coverage and add-on benefits like vision, dental, and pharmacy coverage are available under some group health insurance plans. You can choose between the insurance options your employer offers, as well as remove or add any dependents, during an open enrollment period.

You might be able to add additional dependents to your plan beyond the open enrollment period if a significant life event occurs. These could be things such as marriage, having a kid, or your spouse losing their job.

What To Do If You Lose Your Job While on a Group Plan

You might lose your group health insurance when you finish with a particular employer. However, through something called continuation coverage, you and any dependents might be able to keep your coverage.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) was established by Congress in 1985. It permits workers who lose their employment to purchase group health coverage for a set period of time (including their families).

The same group insurance plan level should be accessible to the dismissed employee under COBRA. Although, the former employee is responsible for paying the full plan cost. This includes any prior employer contributions.

Ways Obamacare Changed Group Plans

The market for individual and family health insurance saw major change as a result of the Affordable Care Act (ACA) laid out by President Obama. Yet, employer-sponsored group health insurance also underwent some significant reforms.

Many employer-sponsored plans were already well-developed before the ACA, offering considerable benefits to workers and their families. However, there were times when that was not the case, and the ACA worked to close some of those loopholes.

Large firms are required to offer their full-time workers reasonably priced, comprehensive coverage now. Insurers cannot determine rates for small group plans by the medical history of the group. They must instead include basic health services.

Pre-existing condition waiting periods are no longer applicable. Plus, any waiting period for eligibility for coverage cannot be more than 90 days.

Young adults can stay on their parent’s health plan until they are 26 years old now because of ACA. Also, non-grandfathered health plans offer a long range of preventive services at no cost.

Group Insurance Plans Explained

You should now have a much better idea of what group insurance plans are all about. The main type of plan you should be looking at is a group health insurance plan. You can then choose additional coverage to suit you and your employee’s needs.

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