What Is Group Health Insurance Plan and How Does It Work?

A group health insurance plan is an incentive that mostly companies/organizations offer to employees. It is a win-win situation: The employer gains the confidence of the employee as the latter feels that their organization is very concerned about their health and well-being, while the employee, and possibly even their family, get health insurance coverage without paying any premium. The company buys a group insurance policy from an insurance provider, which requires a certain number of participants to come into effect.

 Who pays the premium?

The premium on the joint policy is paid by the employer. However, the employee cannot select the size of the coverage and they will be entitled to the benefits only as long at they continue to work for the same organization; as soon as they quit, they cease to be members of the group health insurance policy. It is for this reason that the best health insurance is the one bought by the individual, for themselves of their family, in addition to the group health insurance provided by their employer.

Key differences between an individual and a group insurance policy

·      In an individual policy, the policy contract is in the name of the individual, while the contract of the group policy is held by the employer.

·      The individual has the right to nullify the policy, while in the latter case, only the employer can do so.

·      An individual can take his personal health insurance for any length of tenure they desire, but in the latter case, the individual’s coverage is valid only till the end of their employment tenure.

·      The individual policy is dictated by the age and health condition of the insured, while the group insurance policy is based on the fundamental financial credentials of the employer.

·      The premium on an individual health insurance policy increases as the person grows older, whereas in the group health insurance policy the age of the employer is not taken into consideration, even as the years pass by.

 

Group health insurance plan, how does it work?

 

·      A group health insurance plan is taken out by an organization for its employees, or by an individual who buys a joint insurance policy for all their family members. The health insurance plan covers the usual things that a medical insurance plan would cover, such as hospitalization, treatment of most diseases, except the ones precluded in the terms of the contract, etc.

·      Once the employer has bought the policy with a certain number of employees, a policy document is then issued to each employee, valid till the time that they serve in the company. It is pertinent to note that the group health insurance policy is entirely voluntary and no employee can be coerced to take it.

·      Usually the sum assured of the employee is dependent on the remuneration of the concerned employee, and acts as a great motivation for them. However, once the employee quits the job for whatever reasons, they cease to be members of the group insurance plan and will forfeit the right to be entitled to its benefits.