One of the benefits of working for a company is group health insurance. Such insurance is purchased by an employer and offered to the employees. Frequently, this group health coverage is also offered to immediate family members of the employee.
The employer usually pays a significant portion of the premium for its employees coverage in the group health plan, and the employee then pays the difference, generally as an automatic deduction from the employee’s paycheck.
Group health insurance policies and coverage vary from state to state because the insurance industry is regulated by the individual state.
Laws about how coverage can be issued to large groups are different than laws regarding the same coverage for small groups, and the way that premium rates are determined is also different. The requirements for sole proprietors purchasing health insurance coverage also vary on a state-by-state basis.
As of right now, businesses are not required to offer group health insurance. Individual insurance companies apply their own set of underwriting rules based on the number of employees and other factors. State and federal laws apply to varying degrees. These are based on factors including the number of employees, the type of business and whether an insurance company is providing the coverage.
One benefit of the group health insurance is the requirement known as guaranteed issue. The federal HIPAA law mandates that no matter what pre-existing health conditions small employer group members may have, no small employer or an individual employee can be turned down by an insurance company for group coverage. Some states and policies may have an exclusionary period for coverage of a pre-existing condition of generally six to twelve months.
In the majority of states, the law allows small group health insurance companies the leeway to determine their initial premium rates for each company using a process known as medical underwriting.
The remaining states make small group health insurance companies use processes known as community rating or modified community rating to come up with initial rates. Additionally, coverage options and variables will also be a factor in determining the cost for the group health insurance policy.
You would do well to check with your state department of insurance for specifics in your area.