Group Medical Insurance

How Does It Work?

A group medical plan is typically purchased by a company or organization to then be able to offer medical insurance to its employees or members. There are many different types of plans, each with its own costs, levels of coverage, terms and conditions. Once a company chooses the plan it wants, employees are then given the option to either participate or decline.

In order for a company to be approved for plan enrollment, at least 70% of its employees must agree to participate. Once approved, the cost of the plan is split between the company and its employees. Depending on the plan, employees or members who choose to participate may have the option of including family members in their medical coverage.  

Premiums, Co-Payments, and Deductibles

The amount that an insurer charges a company or organization to keep its group insurance policy in force is called the premium. The company pays part of this premium, and the employees themselves pay the other part, usually opting to have it deducted from each paycheck. In addition to this premium, employees typically incur additional expenses when they use their coverage for any sort of medical care.

One additional cost is called a co-payment, or co-pay. This is typically a small fixed cost that someone covered by the group plan must pay for any covered medical service. The insurance coverage then pays the remaining balance for that service. Another cost is the deductible, an annual amount that a member of the group plan must pay before their health insurance benefits kick in.

Benefits of a Group Medical Plan

The main benefit of a group medical plan is that it provides insurance at a much lower cost compared to individual coverage plans. One reason for this lower cost has to do with the law of numbers – by enrolling a large group in one single plan, insurers are able to spread their risk and are thus willing to offer coverage at a lower cost per participant.

Another reason that insurers offer lower prices for group plans is that the enrollment process gives them a good idea of who they are covering and how much potential risk they are taking on.

These are the basics of how group medical coverage works and why it’s such a popular option for both companies and their employees or group members. Offering health coverage makes a company much more attractive to current and prospective employees, and group coverage is typically more affordable than individual health coverage. Contact ISU-Armac Insurance Services to find the right group coverage for your company and its employees.