Just as most consumers purchase insurance on their autos and homes to protect their property and themselves in the case of an accident, many individuals purchase insurance for groups. For example, a family to protect against unforeseen expenses arising from illness, injury or accidents.
Today, with health care costs rising dramatically each year, even relatively simple medical procedures can run into thousands of dollars. However, it is not just the cost of medical care that is rising. The variety of care available is also increasing.
In order to reduce the risk of unexpected health care costs, private health insurance companies now offer an array of health insurance programs and plans that vary widely in terms of coverage, costs and benefits.
Although at first glance, some health insurance quotes, plans and policies may seem the same, after reviewing the technical language, it will become obvious that they are quite different. Because of the often difficult-to-understand terminology, exclusions, and limitations contained in these policies. For this reason, careful investigation by the broker and consumer should be made.
Insurance designed with businesses in mind. While individual insurance plans can deny coverage or increase rates to a specific individual due to poor medical conditions or high-risk situations, a group insurance plan cannot. Insurance companies must accept the entire group or none at all, nor can they increase rates to one individual. With group insurance plans, there is strength in numbers. Listed below are some of the different types of group insurance plans.
Group Health Insurance
All of the individual types of plans can be purchased on a group basis. Only full time employees may participate in these plans, as determined by the insurance company. (Usually 25 hours per week is considered full time.) It is generally required that the employers pay a percentage of at least the employee portion of the premium. This ensures adequate participation for the insurance companies so as to avoid adverse selection (meaning companies don't want to cover sick employees only).
Group Life Insurance
These plans are usually required in conjunction with group health plans and can be provided in a variety of ways. Benefits can be the same amount for all employees or can be based upon salary or class of employee.
Group Short Term Disability Insurance (STD)
Coverage is generally provided upon the first day of an accident, or upon the eighth day of an illness for a period of 13, 26, or 52 weeks. Usually benefits are for 66 2/3% of salary, but different benefit percentages are available with different companies and in different situations. Definitions of disability vary with different insurance companies.
Group Long Term Disability Insurance (LTD)
Coverage is provided for longer periods of time than with Short Term Disability, typically two years, five years, to age 65 or for life. Elimination periods (also called waiting periods) are longer generally than with STD. This is the time one must wait once disabled before benefits begin. Disability definitions are critical in evaluating these plans.
Group Dental Insurance
Coverage is generally provided for employees and their families for dental expenses ranging from check-ups and X-rays to major expenses raging from crowns to orthodontics. Often times there may be deductibles for the members from $25-$100 and to control costs. Dental is really not an "insured" benefit. When these plans are utilized beyond insurance companies anticipation claim levels, the premiums tend to rise.
Group Critical Illness Insurance
Coverage is generally provided for employees only in the event they suffer a major critical illness. Group C.I. is usually offered at amounts from $25,000 to $100,000 depending on the size of the group. Heart attack, stroke, cancer and coronary disease requiring by-pass surgery are the four basic coverages offered. Some plans may cover for additional critical illnesses depending on the insurance company and the particulars of the group.