No one likes to think about what would happen if their employee or a group member were to get sick or injured. But what if it happens? Until that happens, it’s easy to think that you’ll never need group health benefits and that you don’t really understand how it works.
If you don’t know how it works, keep reading. We'll explain to you how it works and how different it is from an individual health benefit.
What Are Group Health Benefits?
Just like the name suggests, group health benefits plans are plans that cover a group of members in a company or an organization. They can range from insurance, to extended health care benefits plans like a Health Spending Account. Depending on the provider and the terms of the policy, the health group benefits may extend to the dependents of those covered.
How Do Group Insurance Plans Work?
Only companies can purchase group insurance plans but never an individual. Since the insurance distributes among the group members, it requires meeting a threshold. In most cases, insurers require at least 70% participation from the group members or the employees in a company.
As an employee, before boarding the insurance, it is vital tounderstand group health benefits. On the other hand, a company should understand their employees’ need to avoid selecting a plan that employees wouldn’t love. This keeps the balance between the two.
The company selects an insurance plan, and the employees either accept or decline the offer. There are several vital factors to consider at this stage, both to the employees and the employer. The company should understand how the insurer calculates premium, who is eligible for coverage and when the eligibility begins.
The cost of group health insurance is lower than individual plans because the amount distributes across many people. Additionally, the cost is between the members and the company. Simply put, the higher the number, the cheaper and affordable the insurance.
Comparing Individual and Group Health Insurance
Individual Health Insurance
It is one person-oriented but to some extent covers their partner and children. The insurance, in most cases, covers more specific circumstances like maternity, death, etc. some of the advantages of having individual health insurance include:
They cover any pre-existing condition in the body.
On average, they cost lower
It is customizable, and customers choose what works for them or their families
The coverage is not affected by your job
You choose the medical providers you wish
Group Health Insurance
As mentioned,group health insurance is employer-sponsored dental and vision coverage for their employees. It is one of the most popular types of insurance because the national coverage provided by Canada only covers major health benefits. It doesn't cover things like dental and vision.
Having these benefits covered gives Canadian employees peace of mind. They're now able to rest easy and focus on the more important things in their everyday lives.
Advantages of Group Health Benefits for the Employees
Low cost. There is no doubt that insurance has enormous benefits to the employees. The employees may have other priorities and so, unable to affordadditional dental and vision coverage. Group health insurance comes to cover that gap by distributing the cost for these extra benefits among the members.
Unlike individual health insurance, group insurance does not require pre-medical screening before purchasing the plan. Because these plans are providing Canadians with additional vision and group dental insurance, you don't need to worry about getting poked and prodded to get your coverage!
Claiming. Group health benefits are easy to claim depending on the history between the company and the insurer. Employees only need to accept the policy and use the card when making a claim. It is easy, fast, and efficient.
The health benefits fit by default as long as you are a member of the group and accept the policy. It can be a great advantage to those within a company but cannot afford to pay their benefits individually. Additionally, the company will make the deduction before you even receive your pay leaving you with no chance of choosing to pay or not to.
Advantages of Group Health Benefits for Employers
The most visible benefit ofgroup health insuranceis cutting the costs that come with Canadian dental and vision insurance. Small business owners can provide these perks to their employees at a reasonable cost.
Most business owners love saving on the amount they spend on taxes, and paying insurance for your employees helps you do so. Employers who offer their employees insurance qualify to receive a tax credit. The credit compensates employers for the money they payout to the insurer as employees insurance.
Insurance does more than just covering the health of the group members; it also improves the working environment. When the employees know that they are safe, valued, and appreciated by the company, they will work hard for it. The combination of all this can go a long way into boosting the income of the company.
Have you ever wondered why some companies have high employee retention rates? It goes deep into the simplest reason you can ever think of, like insurance. If your employees can afford the insurance and love its policy, they will be loyal to the company.
Depending on the insurer, there are many choices available to the employer to pay the coverage. Most insurers give the option of paying monthly, quarterly, or annually. The options could be beneficial to most small business owners and start-ups for better planning.
Differences Between Individual and Group Health Insurance
Apart from the structure of group health benefits, other features distinguish it and the individual plan. Unlike the individual plan, the group health insurance is a policy covering several individuals but under one plan. Below is an overview of the in-depth differences between the two policies.
Cost is one of the significant differences because individual insurance is cheaper than group health insurance. However, the risk distribution is higher in a group than when involving an individual. As a result, group members pay a lower cost for the insurance than those under individual plans.
Using individual health insurance, you benefit from setting your preferences how you want them, including the doctor and the specific hospital. This is certainly not the case in group health insurance as there are many participants. Therefore, group health benefits are not flexible as it is the employer who sets the preferences.
While using the group health benefit, you don’t own it, but the company does. On the other hand, in individual insurance, you control everything to do with the plan and can even cancel it. Therefore, it is easier to control your plan under an individual license than when using group health benefits.
In a group insurance setup, you can only use it when you are within the group covered by the policy. Otherwise, when you quit or change the employer, you’re no longer under the coverage. It is unlike individual insurance that covers you irrespective of your employer, company, or organization.
Insurers will oftenconsider all the risk factorsbefore covering you, including your age and the medical history. Medical history is unheard of in group health benefits as the cost depends on the employer and employees. Any underlying condition found after pre-screening has a direct impact on the cost of the insurance.
One popularly recognized example of group health benefits is group dental benefits that cover issues to do with teeth. Most Canadians do not have coverage for vision and dental. We, at Olympia, pride ourselves on providing coverage outside the scope of what the national health insurance provides.
Alternatives to Insurance
Group health insurance can be a great advantage to both the employer and the employee. The policy requires a starting point of at least two employees and a 70% participation rate, which can be difficult to achieve for a small business.
As a result, a small business owner may have a tough time offering insurance due to the minimum requirements.
However, these out-of-pocket expenses may be a pain in the neck at times, especially if you do not have an emergency fund.
That's where a Health Care Spending Account (HCSA) comes into play. These are CRA-approved health and dental plans built specifically for small businesses. There are no pre-existing condition qualifiers and they cover a wide range of medical expenses. The plan is one of the most affordable and flexible options out there.
Learn more about Health Spending Accounts (HSA)s by downloading my FREE Guide: