Group Health Insurance: Pros and Cons Author:    Posted under: Health InsuranceHealth Insurance Types

Group Health Insurance is defined as “health insurance that covers all eligible people in a group regardless of their age or physical condition.”*  In the United States, employers have mostly been the provider of group health insurance, hence the concepts of employer-based insurance and group insurance have been greatly associated.  This is not, however, limited to employers, but also extends to other types of organizations, social and civic groups, and the government as well.

Group Insurance can be granted to a group of as little as two and up to a hundred people.  In this group, insurance premiums depend on a couple of factors.  The first would be how much medical services cost in a certain location, and the second would be the projected utilization of the services.  They base this projection on the age, sex, and medical history.  As customary, those with higher risk would need to pay a higher premium.

Like any other insurance policies, there are advantages to having a group health insurance plan.

First is its cost-effectiveness.  Group insurance comes out cheaper as it is distributed among a number of people.  Moreover, your employer is responsible for paying a percentage, if not the entire premium, of the insurance.  What happens now is that you are able to avail of better health plan, at a cheaper price.  However, group plans are not always extended to your family.  Some companies or employers would prohibit signing up spouses or dependents into the plan.

Second is that group insurance provides you with a guarantee despite pre-existing conditions.  There are no medical examinations required or medical history questions to complete, thus making it easy for these people.  This is even particularly advantageous for those families who have members who are not insurable under individual plans.  It covers all people regardless of their age, and even their present state of health.  This however, comes with a price- literally.  The cost may be a little bit higher than the usual group plan, but generally still lower than individual plans.

Third is that group insurance is the only way for future mothers to enroll themselves immediately for maternity coverage.  Normally it would take for you to be enrolled under a specific policy for a year, before you can request for maternity coverage.

These do not come with downsides.  Among the disadvantages are the following.

The disappointing thing about group plans is that you do not have the power to choose what kind of coverage you really want for you.  The limitation of choice is based on the premise that the group plan was made to accommodate as much health benefits it could provide to the most number of people.  Hence, it is not really tailor fit to a particular individual’s needs.  Any individual who is enrolled under a group plan has absolutely no say about the amount of premium s/he has to pay, the deductible, and even the maximum coverage that the insurance can provide.  It is really on a “take it or leave it” basis.

The question about whether to include dependents in the coverage is also an ongoing debate.  There is no doubt that the company should cover the employee; it is his benefit to do so. In doing so they are actually acquiring a low risk since the premise is that the employee is a healthy individual fit to work.  However, dependents of certain members of the company are not entirely low-risk individuals for you to subsidize.  The argument is that will the whole group then account for partial costs for those employees who have dependents to cover, since costs are divided amongst the entire group?

If you leave the company as well, it poses a risk to you since you will no longer be eligible for coverage.  For some insurance companies this is still possible, but you will now have to continue paying the premiums.  However, there was a federal law called COBRA or the Consolidated Omnibus Budget Reconciliation Act of 1985, which makes it possible for employees to continue group health coverage for a period of time.  If you are laid off, or if you leave your job, you will still get the same coverage, but will be charged a higher amount.  Widows with dependent children, and divorced or separated spouses with dependent children, will continue getting coverage for up to three years.**

Again, the bottomline is that you should be able to do enough research to determine which insurance plan is right for you and your family.  Evaluate your needs and your risks carefully, and then decide from there.



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