When it comes to group vs. individual plans, you probably know the basics: Health insurance that an employer provides its workers is group coverage. Health insurance that someone buys on their own is individual coverage.

Group Insurance health plans provide coverage to a group of members, usually comprised of company employees or members of an organization. Group health members usually receive insurance at a reduced cost because the insurer’s risk is spread across a group of policyholders.

Once the organization chooses a plan, group members are given the option to accept or decline coverage. In certain areas, plans may come in tiers, where insured parties have the option of taking basic coverage or advanced insurance with add-ons. The premiums are split between the organization and its members based on the plan. Health insurance coverage may also be extended to the immediate family and/or other dependents of group members for an extra cost.

The cost of group health insurance is usually much lower than individual plans because the risk is spread across a higher number of people. Simply put, this type of insurance is cheaper and more affordable than individual plans available on the market because more people buy into the plan.

KEY TAKEAWAYS

• Group members receive insurance at a reduced cost because the insurer’s risk is spread across a group of policyholders.
• Plans usually require at least 70% participation in the plan to be valid.
• Premiums are split between the organization and its members, and coverage may be extended to members’ families and/or other dependents for an extra cost.
• Employers can enjoy favorable tax benefits for offering group health insurance to their employees.

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