What Is Group Health Insurance, And How Do Plans Work?

Shawn Plummer

CEO, The Annuity Expert

Group health insurance is a type of insurance companies offer to groups of people, usually their employees. This coverage is usually less expensive than if someone buys health insurance alone. This guide will talk about group health insurance, the different types of group health insurance plans, and how it works. We will also give some tips on choosing the right plan for you.

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What Is Group Health Insurance?

Health insurance plans that cover a group of people are called Group Insurance Health Plans. The group members usually get insurance at a lower cost because when the risk is spread out over a group, it’s less for each individual. In addition, group health insurance plans include supplemental health plans and health savings accounts.

How Does Group Health Insurance Work?

Organizations buy group health insurance plans and let their employees or members use them. Usually, at least 70% of the people in the company or organization must participate in the plan to be valid. Groups can only purchase plans—individuals cannot buy coverage through these plans. Because insurers, plan costs, terms, and conditions differ between plans, no two are alike.

When people join a group, they get to choose which health insurance plan they want. Some places have different levels of insurance, so people can decide if they want just basic coverage or something more comprehensive with extra features. The organization and its members share the cost of the chosen plan. People in the group can also pay additional premiums for family coverage or other dependents.

Group insurance plans are more affordable than individual plans because the risk is divided among more group members. This type of insurance costs less because more people are enrolled in the insurance plan.

Group Health Insurance Plans

What is the Difference Between Group Health Insurance Plans and Individual Health Insurance Insurance Plans?

Insurance that an employer or association gives to employees or members is called group coverage, while insurance you buy by yourself is named individual coverage.

Group coverage is usually cheaper since the costs are spread among all group members. It may also include additional health benefits unavailable in individual policies, such as health plans with no deductibles. However, not everyone qualifies for group coverage, which isn’t always available.

Individual health insurance is insurance you buy independently, not through an employer or association. So even though individual coverage typically costs more than group coverage, it is much more flexible. You can customize it to fit your requirements perfectly, and you won’t need to worry about being stuck in a plan that doesn’t work for your health insurance needs. In most cases, anyway, individual coverage also has higher deductibles.

What are the Different Group Health Plan Types?

As you probably know, there are many different types of health insurance companies and different group health plan options from which to choose. But do you understand the coverage each type provides? Below is a brief rundown of the most popular options so that, hopefully, you can make a more informed decision regarding your health coverage.


Health Maintenance Organization (HMO) plans often let employees select their primary care provider (PCP). If the employee or any of their dependents have a specific health issue, then the PCP will refer them to other specialists as necessary.

The most considerable downside to an HMO plan is that individuals with the coverage cannot visit providers outside of their insurance network unless it’s classified as an emergency.


A Preferred Provider Organization (PPO) plan is more flexible than an HMO because members can see doctors outside the company’s network.


Exclusive Provider Organization (EPO) plans mix HMO and PPO benefits. Employees may also couple the plan with a Health Savings Account if qualified.

What are Metal Group Medical Coverage Plans?

The Affordable Care Act (ACA) is a set of laws that says all health insurance policies will have similar features. This makes it easier for people to compare different policy options and choose the one that best suits them. In addition, the government created a “metal” ranking system to help people compare plans.

The rankings are based on how much a company pays for its customers’ medical care. The calculated expected value is the percentage of costs the plan pays across a standard population. However, it should be noted that for each member, the percentage of costs paid by the plan will differ depending on how much that person spends during the year.

  • Platinum health plans typically offer the most coverage but have higher monthly premiums. Platinum plans may cover as much as 90% of health-related expenses, with the employee responsible for covering the remaining 10%.
  • Gold health plans, you can expect to pay up to 80% of your health-related expenses.
  • Silver plans will pay for up to 70% of medical bills.
  • Bronze plans have the most affordable premiums for workers but cover minor expenses (60%). As a result, they’re perfect for healthy people who don’t often need to see a doctor.
Group Health Insurance

What is the Main Advantage of Group Health Insurance Coverage?

Individuals can get lower premiums and comprehensive coverage for themselves and their family members by enrolling in group health plans through their employers. Additionally, employees’ premiums are often pre-tax, which lowers their overall taxable income.

What is the Main Disadvantage of Group Health Insurance Coverage?

If you are laid off or leave the job of your own accord, your Group Health Policy will no longer cover you. In other words, as long as you remain employed, you will be part of the group with healthcare benefits.

What is Covered Under a Group Health Insurance Plan?

A group health insurance policy covers the employees against healthcare expenses such as in-patient hospitalization, pre, and post-hospitalization care, daycare assistance, ambulance service, and other expenses.

What is Not Covered Under a Group Health Insurance Plan?

Most group health insurance plans standardize hospital and doctor visits, prescription drugs, wellness care, and medical devices. However, things that are not crucial for health, such as elective procedures or beauty treatments, usually are not included in the coverage.

How Do I Get a Group Health Insurance?

After you’re hired, ask your employer about your employee benefits and the deadline to enroll in the company’s group health insurance plan. If you don’t meet this enrollment date, you could end up waiting until an open enrollment or having a gap in your group health coverage. Some employers have new employee waiting periods up to 90 days before health insurance starts. You usually won’t have to pay premiums during this time off, but you will not have access to health benefits which can put you and your family at risk for unexpected medical costs.

Your employer-provided group health insurance may offer different coverage tiers or supplementary options like dental, vision, and pharmacy. You can decide these choices during open enrollment and add or remove any dependents. However, suppose a significant life event—like marriage, the birth of a child, or your spouse losing their job—occurs and changes your circumstances outside of an open enrollment period. In that case, you may still be able to enroll new dependents in your group health insurance plan.

Reviewing and understanding what type of group plan is best for your individual and family health insurance needs is essential. You can contact your benefits coordinator or a health insurance professional for policy advice to ensure you choose the best health plan for your needs.

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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