Types of Group Health Insurance Policies

Group health insurance policies come in various forms. In order to be eligible for this kind of coverage, your business needs to have at least two employees or you have to be a member of a big group. Group policies allow holders or participants to get health coverage at premium rates, when compared to individual policies. Here are the main types of group insurance plans that small and big businesses can provide their employees.

Small Employer Group

Companies with less than fifty employees can get affordable group health insurance policies through small employer plans. Generally, this type of plan offers standard coverage for services like primary health care, laboratory and physical examination. Many small employer policies even include annual claims benefits. Insurance companies often combine several small groups belonging to similar industries into one large, collective, master policy. By doing so, small business employees can get coverage at affordable premium rates.

Fully Insured Employer Group

Under a fully insured plan, the employer is only responsible for paying all or part of the insurance premiums. The insurance provider will ultimately be the one to pay for any costs related to the benefits stated in the insurance policy. Often, the annual premium rate paid by the employer remains fixed. Employees may also pay for a portion of the total premiums. However, employee contributions may fluctuate depending on the yearly number of participants enrolled in the plan.

Self-Funded Health Care

In contrast with a fully insured group plan, a self-funded insurance coverage offers an arrangement where the employer, using its own funds, will be the one to cover all employee health care costs and other benefits. Moreover, the employer will also be responsible for the administrative costs related to a self-funded insurance plan. Large companies often use this type of coverage. Self funded plans directly resulted from the passing of the ERISA law (Employee Retirement Income Security Act of 1974).

Health Maintenance Organization (HMO) Insurance Plan

The HMO type of insurance coverage can be considered as a prepaid health plan because policyholders are paying for specific types of health services in advance via monthly premiums. HMO group health insurance policies are cheaper than other types of group insurance plans, but the health care services are limited. Moreover, beneficiaries under this plan can only get services from doctors and medical facilities that are included in the HMO list, or policy guidelines.
Preferred Provider Organization (PPO)

The limited health care services offered under HMO plans gave rise to PPO plans. Under PPO insurance plans, policy holders can enjoy more flexibility when it comes to choosing their doctors and health care facilities. Like an HMO plan, PPO’s also have a guideline or list of preferred health care providers. However, PPO policy holders can opt to use doctors or facilities that are not included in the preferred list without the risk of totally forfeiting the insurance benefits. You should be aware, though, that getting medical services from providers that are not included in the preferred list would result in more expensive co-payments and extra health service costs.

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