A policy bought by an employer and offered to workers is a group health insurance plan. Employees’ families may also qualify for coverage under these plans. These types of plans are key components of most workplace benefits packages, and having health insurance to offer workers is a big bonus today for companies wanting to attract and keep the best talent. Most Americans obtain coverage through their employers today, and this makes good coverage affordable for workers and their families.
Understanding Group Health Plan
Not all group health plans are the same, because laws governing these types of plans can vary slightly from one state to the next. However, plans are all regulated on the same set of standards by the Affordable Care Act. Employers may offer varying types of plans from one company to the next. The size of the company also affects the types of plans people have access to. Americans working for a smaller company with 50 employees or less have access to different plans than people working for companies with more employees. This is because the laws differ in governing large and small companies and their health insurance offerings.For small employers, there are no laws requiring they offer health coverage. Many choose to offer it to help attract and keep good workers. However, they must comply with all federal laws regarding coverage for small companies.
All small group plans are required by the ACA to meet certain benchmarks. These are indicated by bronze, silver, gold and platinum levels. Each one refers to a different tier that provides varying levels of coverage. The levels are determined by the percentage each plan pays for various procedures and services. Platinum may cover as much as 90 percent, and bronze plans usually cover about 60 percent. Gold and silver fall between these levels.
The ACA says that no person can be turned down by an insurer or employer because of a preexisting medical condition. Insurers must also renew their small employer health plans every year. There are exceptions for nonpayment of premium amounts, fraud or other special circumstances. Small companies can buy insurance in their SHOP marketplaces, or they may elect to look outside of these. To receive the small business tax credit, the plan must be part of the SHOP program.
Premium rates for small employers are determined using modified community rating. Factors such as geography, smoking status and age affect community ratings. For example, it would be more expensive to insure a 50-year-old male smoker than a 20-year-old male smoker. It would also be more expensive to insure the 20-year-old male smoker than a 20-year-old male who does not smoke. Depending on state laws, employers may still be able to offer their workers several coverage choices.
For larger companies, insurance is also issued to people with preexisting conditions. Contracts must be renewed by the employer annually, but there are exceptions for certain issues. At the time of purchase, larger plans are underwritten based on employee participation and prior claims. Employees do not have to fill out extensive questionnaires to enroll or qualify. Claims history is what premiums are based on for larger employers, and the cost of providing coverage also plays a part. This may include any changes in laws that would make it more expensive to offer insurance.
Group health plans are typically regulated by the insurance company underwriting them. With some very large companies having hundreds of workers, employers may choose to partially self-fund their plans. These self-funded plans do not have to meet all of the same laws as other types of plans. People who lose their employer-provided coverage can still qualify for benefits.