Group health insurance is employer-sponsored health coverage offered to employees as part of a benefits package. Instead of employees purchasing individual health insurance plans, the employer provides access to a single group policy that covers eligible workers and often their dependents.
Group health insurance is one of the most common ways U.S. employers offer health benefits, especially for small and mid-sized businesses.
How group health insurance works
With group health insurance, the employer selects a health plan from an insurance carrier and offers it to eligible employees. Enrollment typically happens during open enrollment or when an employee is hired.
Employers usually pay a portion of the monthly premium, while employees pay the remaining share through payroll deductions. Because risk is spread across a group, premiums are often lower than comparable individual health insurance plans. Coverage is guaranteed issue, meaning employees cannot be denied due to pre-existing conditions.
Who is eligible for group health insurance
Most group health insurance plans require a business to have at least one employee other than the owner. Eligibility rules vary by state and carrier, but plans typically cover full-time employees and may include spouses and dependents.
Many carriers also require a minimum percentage of eligible employees to enroll in the plan.
What group health insurance covers
Group health insurance plans must cover essential health benefits, including preventive care, doctor visits, hospital services, prescription drugs, and mental health care. Plans may also include additional benefits such as telehealth services and wellness programs.
Employees usually share costs through deductibles, copays, and coinsurance.
Pros of group health insurance
Group health insurance is a familiar and widely expected employee benefit. It can help employers attract and retain talent and allows employees to pay their share of premiums with pre-tax dollars. Employer premium contributions are often tax-deductible.
Cons of group health insurance
Group health insurance can be costly for employers, with premiums that often increase each year. Employers also manage plan administration, renewals, and compliance. Employees typically have limited plan choice, and coverage usually ends when employment ends.
Is group health insurance right for your business?
Group health insurance may be a good fit for employers seeking a traditional benefits model and able to absorb rising costs. However, it is not the only option. Many small businesses compare group health insurance with alternatives such as health reimbursement arrangements or health stipends.
Choosing the right health benefits strategy depends on your budget, workforce, and long-term goals. Book a consult with LegUp Health today, and we’re happy to help you evaluate your options.
