Choosing the right health insurance coverage for you and your family is one of the best investments you can make. Protecting yourself from the expenses that come with sudden or urgent medical care can save you thousands of dollars in hospital bills, prescription drug costs, lab services, and ongoing treatment. Health insurance also ensures you’re able to afford preventive care to stay on top of your current health.

Group health insurance plans are the most common type of health insurance in the United States. With several benefits of group insurance, it makes sense that such a significant number of people take part in this option.

Having group health insurance typically comes from an employer. There are many advantages to it when compared to individual insurance, and those advantages are for both the employee who gets the insurance and the employer who offers the insurance. If you are looking to understand group health insurance advantages, either as an employer or an employee, here are some things to carefully consider.

What is group insurance, and how does it work?

Group health insurance plans are a type of health insurance coverage offered to a group of people under the same employer or organization. Two common group insurance plans are employees of a company and organization members, with employer group plans being the most prevalent.

Because an insurance provider can spread their risk across a pool of policyholders participating in the group plan, costs are typically lower than other types of health insurance policies. This is considered to be the biggest advantage of group health insurance.

So, what’s the difference between group vs. individual insurance? What makes group health insurance plans advantageous for both employees and employers? Here’s how it works:

1. A company or organization purchases a group health insurance plan that is appropriate for the size and needs of their group.
2. The plan is offered to the company employees or organization members.
3. Employees or members are given the choice to either accept or decline the group health insurance coverage.
4. While there may be small variations, there generally must be a minimum of 70% of eligible employees or members participating in the healthcare plan for the group coverage to go into effect.
5. The company splits the premiums with the plan members, which are lower than individual plans because there are a higher number of people to spread the risk across.

In addition to lower premiums, companies and organizations often get tax benefits for offering group insurance plans to employees and members.

1. Small business health insurance can save money 

There are a lot of advantages of group health insurance, and one of the biggest ones is the cost savings. This helps the employee who finds that they can afford insurance for themselves and their family, but it also helps the employer who wants to give their employees good insurance that they can afford to help with. If insurance premiums are too high, neither group is going to benefit.

Owning or working for a small business can be a rewarding experience. You often enjoy a tight-knit work environment, connections with the community, and more flexibility than you might find at a large corporation. However, small businesses can often have a disadvantage when it comes to cost savings at scale, which affects the employer and employees.

Benefits of group health insurance to employers

One way small businesses can save while keeping their employees happy is a good group health insurance plan. Most states offer small business plans exclusively for companies that have less than a certain number of employees. For example, employers with less than 25 full-time equivalent employees may qualify to offer health plans through the Small Business Health Options Program (SHOP) marketplace.

Depending on how many full-time people you employ, you may be eligible for substantial tax credits, such as the Small Business Health Care Tax Credit. Also, the amount that an employer pays towards their employees’ monthly premiums is tax-deductible.

Benefits of group health insurance to employees

Rather than having to purchase high-premium individual health insurance plans, employees of small businesses can benefit from the lower costs of group plans through their employer. They may also get comprehensive coverage for their family members at a much lower price.

In addition, the premiums paid by employees can be done pre-tax, which reduces their overall taxable income.

2. Lower cost due to a larger risk pool

Among the advantages of group health insurance for employees is the higher number of people in the pool (group) that is getting the insurance. When more people are included, there are more options for more people, generally at a lower price than what would otherwise be available. In short, this means a lot of value, including:

• Better insurance plans offered
• A lower price for insurance plans
• More coverage for pre-existing conditions

When you look carefully at the advantages of group health insurance, it is easy to see that there are a lot of reasons to consider it from the employee standpoint. Employees who qualify for this kind of insurance through their employer are generally wise to get it.

That’s because the cost savings are often significant, and the other advantages of group health insurance also outweigh what a person could get through an individual insurance plan. There are times when this is not the best choice, but finding that individual insurance is better is not the norm for most people.

3. Tax incentives for offering health insurance to employees 

The advantages of group health insurance are not just for the employee. They are also available to the employer, in the form of a small business health care tax credit. This is offered to businesses that give their employees insurance and pay part of their premiums. These businesses may qualify to get a credit back on their taxes, so they can be compensated for the money they are paying out toward insurance premiums. This is one of the biggest advantages of group health insurance from an employer’s perspective.

4. Positive work environment and happy employees

Employees that are happy are employees that work hard for the company. That is one of the more subjective or hidden advantages of group health insurance. When an employer offers this insurance to employees, they may get:

• Employees who appreciate their insurance
• Employees who care about their employer and their job
• Employees who see that they can build a career at that company
• Employees who feel valued and appreciated
• Employees that want to make the company better for everyone

All of those things are pretty important as advantages of group health insurance, and they can go a long way toward making employees and employers feel better about their working relationships. Of course, having insurance will not solve all company or employee problems, but it can certainly go a long way toward making sure that employees and employers feel better about everything they have at a particular company.

To say that finding qualified candidates who stick around in today’s job market is challenging is an understatement. According to a recent study by Lattice, nearly 60% of employees with only 3-6 months on the job are already looking for another position. The same study also showed that younger workers that fall into the Gen Z and Millennial categories value more than high compensation when deciding which position is right for them.

What can you offer employees outside of higher salaries? Group health insurance benefits are an excellent place to start. With the younger generation focusing more on preventive care and healthier lifestyles, offering an affordable group plan option that covers these essential health benefits is one way to attract and retain strong candidates.

Insurance is an important part of feeling safe and having peace of mind, and when employers provide that for employees, it most often does not go unnoticed by those employees.

What will a group insurance plan cover?

Group insurance plan coverage will vary depending on several factors. However, all small group health insurance plans are required to provide 10 essential health benefits under the Affordable Care Act. Essential health benefits include:

• Emergency services
• Outpatient care
• Hospitalization
• Pregnancy, post-natal, and newborn care
• Prescription drugs
• Lab services
• Mental health and substance abuse services
• Pediatric services (including oral and vision care)
• Preventive care and chronic disease management services
• Rehabilitative and habilitative services

Group health insurance plans are often divided into tiers that offer everything from basic coverage at a lower premium to more comprehensive coverage with optional add-ons. Some plans will also include group vision insurance and group dental insurance for adults and family members. To qualify for a group insurance plan, the participant must be on the payroll, a spouse of the employee, or a dependent child of the employee under the age of 26.

It is against the law for an insurer to refuse coverage or charge a higher premium to individuals who have pre-existing conditions. Also, health insurance companies cannot limit benefits or refuse treatment coverage if a person had a health issue prior to the start of the plan’s coverage.

However, the exception is “grandfathered” health plans. Health insurance plans purchased before March 23, 2010, may qualify for a “grandfathered” status and not cover pre-existing conditions

Why get a small business health insurance plan to cover my employees? 

When it comes down to it, if you meet the requirements of a small business, you aren’t legally required to offer health insurance, so it depends on your financial situation and preference whether or not to offer medical coverage. When a company has healthy employees, including the employer who can join the plan, too, there are even more advantages of group health insurance.

These employees will take fewer sick days, and they will be more likely to focus on their jobs, see the doctor for regular checkups, and be open and upfront with their employer about any health problems.

There are big advantages of group health insurance, and you’ll want to consider all of them when deciding whether or not to offer a group plan. Offering important benefits and perks will likely help to form a better bond between employers and employees, and that bond is one of the ways everyone in a company manages to get more done and feel better about themselves and their working environment.