Group insurance is a single insurance policy, such as life or health insurance, under which individuals in a group, for example employees (and sometimes their dependents) are covered, as long as they remain part of the group. This insurance policy incorporates all individual employees or members under one “master policy” which is owned by the employer. Members included in the group plan receive insurance certificates which demonstrate their eligibility for benefits. A small payroll deduction is taken from each paycheque from group members in order to finance the group insurance policy. Some companies however will fund the entire cost of the policy in order to provide a benefit to their employees. All group plans are to be renewed annually by the employer and are available as a term, permanent or credit group plans. A common feature within group insurance is that the premium costs for an individual may not be risk based. Instead, the same amount is applied to all insured persons in the group as the risk evaluation is averaged. As a result, insurance is decreased and the premiums decrease because of fewer claims. A standard group size covered by group insurance begins with a group of a minimum 25 members. If insured as a smaller group evidence of insurability may be required because the risk is not shared equally. Risk is decreased when all participating members work fulltime and that the group includes at least 75% of eligible employees. Many group health insurance plans cover dental, vision and prescription drugs, and may also include life insurance, group disability, accidental death and dismemberment, short-term disability, critical illness, and Best Doctors (Medical Referral) services. Offering group insurance plans help improve morale and increase productivity by providing financial security and support when your employees need it most. Many people prefer to work with a company that offers health insurance coverage over one that does not. Some group plans extend these benefits to participants’ family members and some policies may or may not restrict the choice of one’s physician. Benefits of a Group Health Insurance Plan for Employers Group plans provide various advantages for employers as well as employees. • A group health insurance plan offered to employees gives the company an edge. Not only is it an attractive feature in a job offer, but it can also be a factor in retaining employees. This contributes to having a low turnover rate;
• Group plans allow access to health insurance at a reduced cost;
• They are less selective and less discriminatory than individual insurance plans, ensuring that all employees are treated under equal terms;
• Most premiums paid by an employer are tax-deductible as a business expense;
• Group health insurance gives workers a sense of security and may help to boost productivity and morale;
• Group insurance plans enjoy lower premium costs because of lower administration costs associated with writing and maintaining policies. Benefits of a Group Health Insurance Plan for Employees Although individual health plans may provide more flexibility, the rates cannot be negotiated and exclusions exist for pre-existing medical conditions. On the other hand, a group health insurance plan offers many advantages to an employee: • The premiums are typically more affordable than individual health insurance;
• There are usually no exclusions for pre-existing medical conditions ;
• One family rate is charged - you do not have to pay a premium for each dependent ;
• Higher limits are permitted for drug and dental claims ;
• The group renewal rate is negotiable; • Employees are covered up to 31 days after termination from a group plan and holds the option of converting his/her group plan into a term life or permanent policy; • Spouses can coordinate their group benefit plans to receive 100% coverage for medical services.