To find out how group benefits work, first, we need to find out what they are.
What are group benefits?
Group benefits are plans that cover a group of people, such as employees in a company. It is offered to employees regardless of their age, profession, or social background. This kind of plan is often offered by a company as a part of their total compensation package.
Having group insurance is a financial advantage. Rather than having employees purchase expensive policies on their own, the employees are all grouped together, which offers greater bargaining power.
How do they work?
Group benefits are different from other benefit packages as they are based on a group rate. Based on the number of employees, they can offer a lower rate of insurance. Having a large number under one insurance policy allows the insurer to put together many expenses such as administration, operation, and renewal.
What do I need to know in order for my company to qualify?
In order to qualify for group insurance, you need to be a “group”, in other words, you need more than one person. For a small business, there can be as few as 2 people during the special enrollment period. Otherwise, you need 75% participation for groups of 10 or more, from your company’s employees in order to qualify.
Benefits can be obtained for any type of company, small, medium, or large. These plans can include a wide range of things such as dental plans, medical equipment, medical drug coverage, vision, out-of-country coverage, and more!
The types of benefits you get greatly depend on what you are looking for. For example, some specialize in fully pooled or partially pooled plans. For fully pooled plans your rates are based on averages of the entire pool. Rates for experience-based plans are based on the usage of your staff. Experience rated plans can be tailor-made for your company and its needs without you having to break the bank
Under a group insurance policy, an employer would purchase a master contract. The premium you would pay is based on the number of members and the amount of coverage offered. So, if there was an increase in members then the premium would go up. Likewise, if there was a decrease in members, the overall monthly premium will decrease.
Paying for the premium couldn’t be easier! You will never worry about missing a payment since most employers submit premiums by pre-authorized payments
You might be thinking “but how are group benefits being affected during COVID-19”? Check out our article on that topic.
Group benefits are a good idea for the employee and the employer! Contact us for any further questions you have. We would be happy to assist you.