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Group health insurance offers numerous benefits over individual or group health insurance. People prefer to get health insurance through their employers. One of the primary reasons for this is the reduced amount of premiums that an employee would pay as compared to individual health insurance. This is because the employer usually contributes toward the premiums.
Group insurance is also availed if you are a member of a union, a professional association or any other group. In this case, though, you are responsible for the entire premium. There is still the cost advantage as the insurance is bought for the entire group and thus will have lower premium amounts.
In a group insurance plan, the decision on the kind of health insurance to be bought is taken by the employer. The employer usually does this through broker. Thus the employer always gets the best deals as he is purchasing bulk insurance through the broker. The only disadvantage going forward is that you might not be able to choose the plan that is applicable to your needs. The kind of benefits offered totally depend on the employer.
In a group insurance plan the employer may help set up a health savings account toward which even the employer would contribute. This account earns an interest. The balance in these accounts will be saved up allowing you to build a cushion that would take care of your medical needs. The employer can also set up a health reimbursement account toward which only the employer can contribute. The employer controls the amount of money put into the account. He also decides whether to forfeit the money in case you leave the firm. An Archer medical account can be set up by your employer. In this type of account, there are no restrictions on the use of the money. Both the employer and the employee can contribute funds towards it, though only one of them can in a single year. The greatest benefit of this account is that the employee can keep the money even after he leaves his employer.
There are several laws that pertain to group insurance. One of the benefits of buying insurance through your employer is that your employer will not be denied health insurance, whatever your pre-existing condition might be, as per a federal law. The insurers are also required to renew the contracts every year as per the employer’s discretion. This law pertains to small business groups (2-50). In case of large business groups, the law says that insurers can deny insurance to the whole group, if they have to, based on their claims history. However no single employee can be disregarded or omitted when issuing insurance.
If you were to lose your job, then your health insurance benefits are still available to you as per the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). Under this act, the group health plans sponsored by employers, who have 20 or more employees, are required to offer continued coverage for you and your family for 18 months after you leave your job.
This article was contributed by Prerna Mordani.
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