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How Does Group Health Insurance Work?

March 29, 2021, by New City Insurance

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According to the Bureau of Labor Statistics, nearly 90 percent of employees in mid-size and large private companies are offered health benefits. Group health insurance provides employees with a range of benefits, including better access to care and manageable costs. Organizations can also reap the advantages of group health insurance, such as tax benefits and increased employee recruitment and retention. Health insurance is a sought-after benefit in the United States and is often used as a tool by businesses to attract top talent. Both small and large companies offer health insurance to their employees, and business leaders should carefully research the plans available to them and gain a solid understanding of how does group health insurance work.

What Is A Group Health Insurance Plan?

Group health insurance is a type of health coverage available through an employer or other entity that provides eligible individuals insurance coverage. Both small groups, meaning up to 50 employees, and large groups of more than 50 employees can acquire group health insurance. However, small and large groups have different regulations that they must meet.

One of the biggest differences between small and large group health insurance is that smaller employers generally have less negotiating power than larger employers when setting prices for coverage. Any business with at least one full-time equivalent employee (not including the business owner) can qualify for group health insurance. Individuals cannot purchase group health insurance. Under a group health insurance plan, members can get health insurance coverage at a reduced rate as the insurance carrier’s risk is spread out across multiple policyholders.

How Does Group Health Insurance Work?

Group health insurance plans are purchased by employers and offered to eligible employees or members. Plans generally require at least a 70 percent participation rate by group members to be deemed valid. After choosing a health plan, group members have the option to accept or decline coverage.

Depending on the type of plan, employees may be offered the choice of different tiers, such as basic coverage or more comprehensive coverage with add-ons.

Cost Of Group Health Insurance

Group of Happy Multi-Ethnic Sportive People who know how does group health insurance workHealth plan premiums are generally split between the business and its participating members. Many group health insurance plans allow coverage for immediate family members and dependents for additional costs. However, the overall cost of group health insurance is usually much lower than an individual plan due to the lower amount of risk faced by the insurance company.

Under federal law, all qualifying small employers are eligible for group coverage if they choose to purchase it. With a small group insurance plan, the insurer determines rates based on the employer’s zip code and the age of the participants.

Who Is Eligible?

If an employer offers group health coverage to any full-time employee, the employer must offer health coverage to all full-time employees.

Although not required, employers also have the option to provide coverage for part-time employees who work fewer than 30 hours per week. If an employer offers group health coverage to one part-time employee, the employer must also offer all part-time employees coverage.

An eligible employee cannot be denied group health insurance coverage based on a preexisting medical condition. In most cases, dependents of eligible employees also have the right to coverage under a group plan. Dependents generally include children, spouses, and in some cases, unmarried domestic partners. Senior Adult Couple Exercise Fitness Strength after knowing how does group health insurance work

However, a dependent cannot enroll for health coverage unless the employee has enrolled. The Affordable Care Act (ACA) requires group insurance plans to provide coverage for adult dependents up to age 26. Employers can enjoy various benefits by offering group health insurance to employees, including eligibility for certain tax credits.

Businesses may be eligible for a tax credit of up to 50 percent of what they pay if they offer group health insurance to their employees. Group health insurance can be expensive, but this tax credit can significantly reduce its tax bill.

Work With New City Insurance

A group health insurance plan can help employers and their employees pay for health care expenses at a more affordable cost than individual health insurance. Premiums are usually paid with pre-tax dollars, which can help employees pay less in their annual taxes.

Also, businesses pay fewer payroll taxes and deduct any contributions made that year when completing taxes. To learn more about how group health insurance works or to speak with an insurance professional about acquiring group health insurance for a business, contact New City Insurance today.

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Filed Under: Group Health Insurance,  Insurance

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Google Rating
5.0
New City Insurance
New City Insurance
5.0
Carol Zhang
Carol Zhang
04:29 06 Mar 22
As a rapidly expanding national media organization, the employee benefits strategy and administration that New City has provided us during our growth has been invaluable. They have been proactive about informing us of the different benefit strategies available to us as we grow as well as managing the additional compliance laws and reporting requirements at each stage of our growth.
Claudia Villalobos
Claudia Villalobos
20:14 03 Mar 22
New City Insurance made navigating through all the health insurances super EASY. Their documents are highly informative, professional, and easy to work with. Thank you for making the process of choosing a health plan so simple. You guys are THE BEST!
Philippe Salas
Philippe Salas
17:02 22 Feb 22
I never expected to have a good time talking to an insurance salesman, but let me tell you Brendan was quite the treat. He was very helpful explaining the options and has a wonderful sense of humor. I hope to speak with him every time I call.
Jennifer Polito
Jennifer Polito
17:15 09 Feb 22
Super easy enrollment process. Fast and friendly customer service. If you are looking for an insurance company that is there for you every step of the way I highly recommend New City Insurance.
Rocky Salas
Rocky Salas
23:46 07 Jan 22
So friendly, I hope to speak to him again in all my future insurance needs.
Rocky Salas
Rocky Salas
23:38 07 Jan 22
So friendly and soft spoken. I hope to speak to him again in all my future insurance needs.
Jose Brena
Jose Brena
13:20 06 Jan 22
Eric Calciano has been extremely helpful in finding and selecting the right insurance coverage for our company. With many options out there Eric assisted us on getting a low cost provider saving more than 20% than from our competitors and providing excellent coverage for our employees.
Anastasia Beaverhousen
Anastasia Beaverhousen
17:05 28 Dec 21
Signing up for insurance was quick and easy. Felicity Sundsboe
SFCC
SFCC
22:08 29 Nov 21
Jeff Stoltey and his team provide excellent customer service. Jeff has always provided my company SFCC with straightforward options. I went to a larger insurance company only to RUN BACK to Jeff at New City Insurance. I recommend them to anyone needing insurance without hesitation.
Kevin Luby
Kevin Luby
19:13 22 Oct 21
Quick, easy & informative. We were able to secure quality insurance for our small business on a tight deadline. Thanks for the help New City.
Theresa Ruybol
Theresa Ruybol
19:30 01 Jul 21
Eric was so great with us. He was very patient and kind as we are a newer smaller organization who is growing rapidly. With that said, we had made our inquiry, he had great rapid response and mostly had to wait on me. Any request that we made and/or questions we had, he was great answering and helping us understand. Then when we were ready for all documents and to move forward, Brendan helped with getting that together and the two of them worked their magic on New City's end to notify me of what was needed, assist me in that process and confirming that all was complete and approved for the coverage. I just want to say thank you all again so much, as insurance has always been confusing to me, and you all made that process go a lot smoother.Thank you
Andrea Ordendorff
Andrea Ordendorff
21:06 07 May 21
I've been working with both Clayton and Brendan for well over a year. As the purchase of our dental practice was delayed well over 14 months they both patiently supported me and continued to make themselves available. When we were officially ready to sign up they made the whole process seamless and super easy. This team is highly knowledgeable, professional, supportive, and efficient! I can't thank them enough for everything they've done.
T W
T W
22:32 30 Aug 20
I love New City Insurance. I never had a good experience dealing with insurance brokers until I started working with Brendan. He’s awesome! He is patient with me and takes the time to answer all my questions. I’m very grateful for all his help and hard work!
Mary Jane Deyette
Mary Jane Deyette
00:57 11 May 20
Jeff Stoltey is so awesome...even thru my company had only two employees, he took the time each year to research and find the best plan for us. The only reason I am leaving New City Insurance is because we no longer have any employees. Thank you Jeff
Alma Ortiz
Alma Ortiz
22:25 23 Feb 20
Brendan was awesome! I couldn't figure out how to pick my plan and he returned my call on a weekend to help me. Outstansing service!
jessica kavanagh
jessica kavanagh
19:53 13 Feb 20
Brendan was so helpful I definitely recommend him if you’re in need of good help and getting it done promptly. Thankyou so much again.
Tricia DeYoung
Tricia DeYoung
19:49 13 Feb 20
I was very thankful I inquired about this info. with Brendan. He was very helpful so I understand the benefits available much better now. Thank you Brendan.
B Bayer
B Bayer
17:43 24 Sep 19
NCI handled almost everything from start to finish. Clayton and Brendan made the plans easy to understand and walked me through the application process. They got me my ID numbers before my cards arrived so that I could keep an appointment I had already scheduled. My last broker wouldn't have done that. 5 stars!
Jessica Lehr
Jessica Lehr
03:36 07 Jun 19
Our staff was interested in a health plan, but we didn't know how beneficial a solid employee benefits package would be for our business to expand. We'd lose prospective employees because they had more options for their medical insurance which was sometimes more valuable than more pay. The New City team was amazing and gave us as many affordable options as possible so that everyone had their needs met.
Mike McClay
Mike McClay
19:36 03 May 19
My employer uses New City as their insurance broker, and I'm always amazed when I call in for assistance by how knowledgeable and attentive their staff is with my requests. Their online benefits platform makes selecting insurance plans pretty darn easy. I would highly recommend their services.
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