Infographic Solution: A to Z of Group Health Insurance

Economic Web Desk: Group health insurance is employer-sponsored health coverage for business owners, employees and often for dependents. A majority of Americans have group health coverage through their own or a family member’s employer-sponsored group plan. Employers and employees can share costs of the insurance.

Group Health Insurance

Group health insurance coverage is a policy that is purchased by an employer and is offered to eligible employees of the company (and often to the employees’ family members) as a benefit of working for that company. A group health insurance plan is a key component of many employee benefits packages that employers provide for employees. The majority of Americans have group health insurance coverage through their employer or the employer of a family member. One of the advantages for employees in a group health plan is the contribution most employers make toward the cost of the health coverage premium – in many cases, employers pay one-half or more of the monthly premium for an employee. Another advantage is that most employers have established Premium Only Plans (often called POP plans) that allow employees to pay any employee-required contributions to premiums on a pre-tax basis. Between the employer contributions, which aren’t taxable for employees, and the POP plan, employer-provided health insurance is significantly subsidized due to these tax breaks.

Some states define a small employer group as those that have 1-50 employees, but most states require companies to have at least two employees to qualify for group coverage. Insurance companies and the individual states often have specific and strict requirements for very small employer groups to document that they actually are legitimate businesses and have the appropriate number of eligible employees to prevent fraud. Employers generally have to provide payroll tax documentation validating who is an employee.

In the past, some states that allowed sole proprietors to purchase group coverage were often referred to as states that guarantee coverage for “business groups of one.” The ACA has eliminated this option of “business groups of one.” Instead, these business owners have been directed to purchase coverage in the individual market whether through the marketplace or outside the marketplace.