Group Medical Insurance

A Insurance Article Contributed by Deepak Cutting

Group Medical Insurance

Employers commonly offer such plans as their medical benefits schemes. This type of insurance cover can also be negotiated through trade unions, professional groups and social clubs, among others. The group insurance cost per individual is generally lower when compared to the individually negotiated policy for the same terms, due to the spread of risk and lower administrative costs.

A majority of Americans are in the employer promoted group insurance medical benefits plan, either on their own or as the spouse/child of an employee. The law provides differing treatment to groups plans offered by small businesses. While provision of some medical benefits are mandatory for bigger employers, the small business may not be covered under that law.

Also, a separate set of laws govern medical insurance benefits offered by 'self funded' health plans. Here the promoting group has the financial capacity to bear all costs of medical insurance and do not need support from an insurance company or a Health Maintenance Organization(HMO) plan.The advantage in such arrangement is the lower price due to reduction in administrative costs.

There is no legal obligation on employers to either offer group medical cover to their employees and those that have such arrangement are not legally bound to pay for the service. Some carriers may be required to pay half the cost of medical insurance of their staff.

Common Types of Medical Insurance

*Small employer: Businesses with less than 50 regular, full time employees, each working a minimum of 30 hours per week, are categorized as small employers. If a small employer has medical insurance cover, it must apply equally to all the workers. The law limits the addition of more than 15% to the annual increase in cost of such insurance by the insurance company, on account of the health status of employees.

*Large employer: they are sponsored by businesses that do not qualify to be called small businesses and don't self-fund. This is to include other social, business, professional or religious groups etc.

Large employers may offer the facility to some specific group of employees, e.g. executives' only or skilled workers only and not provide any medical insurance for others. Coverage, if provided, must, however, be equal to all members of that class, without distinction on any grounds.

*Self-funded: The federal Employee Retirement Income Security Act (ERISA) regulates these medical insurance plans. Organizations with capacity to meet the treatment costs of their policyholders sometimes prefer to directly offer the service without support from any insurance company. This saves on overheads and administrative expenses. Most plans of the larger employers are self funded. There are limited federal requirements to be satisfied in case of self funded insurance plans. The benefits may vary, depending on the employer.

*Multiple employer welfare arrangements: These are employer promoted medical insurance plans that are provided by a group of businesses or industry jointly. Such plans have reduced costs by spreading the risk to a larger base and also by reducing individual administrative costs. These insurance plans may be self-funded or the HMO type.

Your Rights under the Group Medical Insurance Plan

Once such a plan is finalized, the insurance company cannot refuse the benefits to any particular member or charge differing rates within the same group.