Medical insurance is necessary for employees and there is nothing better than group health insurance for them. What is group health insurance? It is alright if you do not know what group health insurance is, a lot of people seem to not know what this kind of an insurance coverage really is.
It is basically a form of insurance by which a group of people is covered against the risk of paying for their medical expenses. Such a group may include people who are employees of a common employer, members of societies, or professionals in a common group. The problem of adverse selection is reduced by group health insurance coverage. A pool of eligible people is created, who are not a part of the group just to obtain insurance. In other words, they belong to the group for reasons that are not related to insurance, such as they may all be working for a common employer.
Understanding What Group Health Insurance Coverage Is
In broad terms, it is relevant to classify group health insurance as health insurance for “employer – employee” groups. The insurance may cover all members working for a common employer. Similarly, it is also relevant to classify it as health insurance for “affinity” or non-employer – employee groups, where something other than employment is common between the members, such as a bank or deposit holders.
In group health insurance, one feature that is common at times is that the premium cost for each of the insured individuals may not be risk-based on an individual basis. Instead, the amount for all the insured individuals in the group is the same. For instance, all employees of an employer in Europe, regardless of their age and other factors, pay the same premium amount for group health insurance coverage. On the other hand, when it comes to private health insurance coverage in Europe, different premium amounts are paid by different insured individuals depending on their age and other factors.
Lower Price Per Group Health Insurance Policy
Consumers are also attracted to group health insurance policies because of the usually lower average price per policy. With an interest in gaining customers, prices of policies are slightly cut by carriers so that members of groups can be accommodated. Carriers issue the policy in the name of the Master Policy Holder, i.e. the employer. The employer regularly shares details of all employees so that at any point in time the group insurance policy only covers those in active employment. The employer may collect the premium and pay it to the insurer, or the master policy holders may also decide to pay the premium themselves.
As long as employees are working for a common employer who is offering group health insurance, they usually remain under the group health insurance coverage. There are many health insurance companies in the United States that fully insure many employer-based health insurance plans. This means that employers sign a contract with these health insurance companies for group health insurance coverage to provide employees with health benefits, and all claims risk is assumed by the company.
Fully insured group plans are regulated by the states. What is group health insurance you ask? Well now you know exactly what this distinct form of health insurance really is. Moreover, employers can even help their employees obtain a NI number by assisting them in acquiring a National Insurance card.