Group health insurance is defined as health insurance written for a number of people under a single, master policy that is issued by their employer, or to an association with which they are affiliated.
The cost of group health insurance coverage is spread out among members of the group. Group health insurance is also often easier to qualify for than an individual policy, since health insurance companies assume that the majority of employees are healthy, and only a minority are likely to get sick. Essentially, the odds are in the favor of the health insurance company when an employer purchases insurance for his or her employees.
There are various group health insurance policies to choose from. They include:
- HMOs - or Health Management Organizations. These policies cost less, but offer little flexibility
for employees.
- PPOs - Preferred Provider Organizations. These offer better group health insurance coverage, but
can cost more.
- POSs - Point of Service Plans. These plans are seen as meeting half way between an HMO and a
PPO. They are less flexible than a PPO, but more so than an HMO.
- HSA - Health Savings Accounts. These are a newer brand of more affordable group health
insurance. HSAs can also act as a supplement to retirement programs, since unused funds
can stay in the account and grow with tax advantages.
When purchasing group health insurance coverage, an employer should be aware of all the options available to him or herself, as well as those likely needed and appreciated by employees. For example, many small business owners include some kind of dental, vision, or alternative medicine options, though these may costs more.
Ultimately, the buyer will need to find a compromise with an affordable group health insurance policy that balances total cost with services provided, and the employee's likely ability to pay out of pocket expenses.
Finally, some states allow several small businesses (of 2-50 employees) to form an alliance, and purchase more affordable group health insurance at a savings.
