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What is group health insurance?

Group health insurance is health insurance that covers a group. It cannot be purchased by individuals but must be purchased by an organization that intends to cover a large number of people, such as its employees. By covering a group, the risk is dispersed among members, reducing the burden on the insurer. As a result, members of a group health insurance plan usually have reduced costs.

When an organization purchases group health insurance, it takes on some of the burden of payment. It’s also responsible for connecting employees with information about their group health insurance options. Typically, several plans are made available to employees, who can then opt into their preferred tier. To be viable, at least 70% of employees must participate in group health insurance.


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When do I need to be aware of group health insurance?

You’ll need to understand group health insurance when discussing the different types of insurance available to employed individuals. For example, due to the discounts offered by group health insurance, it’s often offered as a benefit for potential employees, who may have questions about its advantages compared to private insurance.

What is important to know about group health insurance?

With many different health insurance options on the market, individuals want to know the major pros and cons of every plan. When considering group health insurance versus buying an individual plan, it’s important to know the following:

  • Employees may opt out of group health insurance.
  • Group health insurance can be used to cover dependents and immediate family members, but this involves an extra cost per person covered.
  • You can purchase group health insurance through associations such as wholesale membership clubs, the Freelancers Union, and AARP, rather than going through an employer.
  • There are two types of plans available through group health insurance, PPO and HMO; PPO offers greater flexibility, but has higher costs while HMO plans have lower costs, but more restrictions on doctor choice and other factors.