Benefits Breakdown: What Exactly Is a Group Health Plan?
If you’re an employer or HR professional, you’ve probably heard the term group health plan thrown around a lot—but what does it actually mean?
Let’s break it down.
What Is a Group Health Plan?
A group health plan is a single insurance policy issued to an employer that covers a defined group of employees. Often, employees can also include their dependents. In most cases, the employer shares in the cost of the premiums with the employee. Group plans are different from individual health policies because they are tied to employment and offer several advantages. These include cost and access.
Why Do Employers Offer Them?
- Recruitment & Retention: Quality benefits attract and retain top talent. In today’s job market, a strong benefits package can be just as important as salary.
- Tax Advantages: Employer contributions toward premiums are typically tax-deductible.
- Lower Costs Through Group Buying Power: Group plans can reduce risk for the insurer, which often results in better pricing than individual coverage.
- Access to Broader Coverage: Group plans tend to have broader networks, stronger coverage options, and the ability to customize based on your team’s needs.
Who Can Be Covered on a Group Plan?
Most group health plans are available to full-time employees, but employers can define eligibility within certain legal parameters. Many plans also extend coverage to spouses and children. Some employers even offer tiered contribution levels to help support families more affordably.
What Does It Typically Cover?
At a minimum, group health plans generally include:
- Doctor visits and specialist care
- Hospitalization and emergency services
- Prescription drug coverage
- Preventive care and screenings
- Mental health services
Some employers also choose to offer add-ons like dental, vision, life, disability, and voluntary benefits.
Coming Next Week:
We’ll take a closer look at the different types of group health plans—from traditional PPOs to level-funded plans and ICHRAs—and help you understand which might be right for your business.
Have questions about your current plan or considering one for your business? I’m here to help.
—Ross Durham
Employee Benefits Agent, Frost Insurance
