What an Employer Group Health Plan is

Employer Group Health Plans is a health insurance plan which is purchased and maintained by an employer – or employee group such as a union – and is offered to eligible employees of the company, as well as to their family members and dependents, as a benefit of working for the company. In many cases, the group health plan is a key component to the companies benefits package. The majority of Americans who currently have health insurance are insured through an employer group health plan, either through their own employer or through the employer of a family member. One advantage of the employer group health plan is the contribution the employer makes toward the costs of the group health plans premium. In fact, in most cases the employer pays half (or more) of the monthly premiums on the group health plan their company offers the employees.

All Group Health Policies are not the same

Even with the Affordable Care Act, insurance is still largely regulated by each individual state, therefore all policies are not the same. In fact, the policies can vary significantly state to state. In addition to this, different types of companies offer different benefits plans.

Changes under the Affordable Care Act

As the provisions of the Affordable Care Act are enacted according to the timeline, some changes to employer group health plans will come into play. It’s important that both employer and employee are aware of these changes.

For Employers:

  • In accordance with the Affordable Care Act, effective January 1, 2014 any employer with 50 or more full time employees must offer a group health insurance plan to its full time employees
  • Each employer with 50 or more full time employees should have an insurance policy in place no later than October 1, 2013 and allow open enrollment into that plan for all employees to have insurance in place by January 1, 2014.
  • If an employer fails to offer insurance to their employees, they will face penalties. Penalties will be in the amount of $2,000 per employee – however they do not count the first thirty employees. As an example: a company with 55 employees will pay a $50,000 fine.  (55-30=25  25x$2,000 = $50,000.)
  • Employers with fewer than 50 full time employees will be given a tax incentive to offer a group health plan to their employees, however they are not mandated to offer the insurance as the larger companies are.

For Employees:

  • If you are employed by a company which has 50 or more full time employees, speak to your human resources department about signing up for health insurance through the employers group health plan.
  • If you are employed by a company with fewer than 50 full time employees – yourself included – ask your employer if they intend to offer insurance. If they are not going to offer insurance, then you must sign up for an individual policy through the Health Care Marketplace under the Individual Mandate. However, you do have other options.
    • Find out if you qualify for Medicare
    • If you are married to, or a dependent of, a full time employee of a larger company that must offer insurance, sign up for insurance through their employer group health plan.

Important Facts

  • In order to make the premiums affordable for employees, the monthly premium for employees should not exceed 9.5% of the employee’s salary.
  • Any insurance plan, must include the Essential Benefits Package (i.e.: Rehabilitation services, ambulance services, emergency services, prescription drugs, maternity care, immunizations and well visits) – the exception to this are insurance plans which are considered ‘grandfathered’.
  • Your employer cannot force you to accept any insurance program offered. You can, in most cases, choose to not take part in an employer group health care plan. However, in some cases, participation in the group health care plan is mandatory.  For those who can chose to opt out, you have options. You may find a policy that will cover you – and your family – with better coverage and at a better cost through the Health Care Marketplace. Take the time to research your health insurance options prior to making a commitment to any policy. But remember, time is running out. Every American must have medical insurance in place by January 1, 2014.
  • Tax considerations are offered to small business owners with less than 50 full-time employees at 35% of the cost of premiums for 2013 for small businesses and 25% for non-profit companies. Those percentages will rise in 2014.

Given the fines and penalties an employer with more than 50 full time employees will face, it’s imperative that a group health insurance plan be implemented as soon as possible where none currently exists.

Smaller companies comprised of less than 50 full time employees are not mandated to provide insurance, however they will be offered significant tax credits if they choose to do so.

As the employee of any company – large or small – unless company policy mandates that you must participate in the company group health program, you have options available to you. Take the time to research your options.  Under the Individual Mandate of the Affordable Care Act, you must have insurance coverage in place by January 1, 2014.

One last thing to remember, under the Affordable Care Act, anyone under the age of 26 is now allowed to remain on their parent’s insurance policy – and can be enrolled on their parent’s policy if they are not currently covered.