As evident from the name, group health provides health care coverage not to an individual but to a group of people. Often, it is provided by an employer of a company or small business house to all its employees. However, its scope is not limited to corporate houses. It can also be taken by any clubs, associations, organizations or any other group to cover for health care expenses for its members. While it does provide you with an easy and inexpensive cover, it has its drawbacks as well. Here, we throw light on the pros and cons of group health insurance.
Group Health Insurance Pros
- Subsidized premiums
Group health insurance plans attract a subsidized premium from your side as a part of the premium is paid by the employer. Even if it is an organization or club; the premium charged is much less than an individual plan. Even if a group policy is purchased for a family; you get a better deal.
- Less scope for adverse selection
In a group insurance plan, the risk of claims is spread over a large group of people. All the employees or members pay the same premium. Thus, there is no consideration of existing medical conditions or age here. These two factors often attract a higher premium or are denied insurance coverage in an individual insurance plan. There is barely any scope of adverse selection.
- Minor sickness/maternity also gets covered
There are many group policies which cover minor illness as well like dental medical bills, EMT related expenses or even minor health issues like malaria fever. Often you can claim compensation even if you are not hospitalized for less than a day. Another major benefit is that these insurance plans may cover maternity as well. Thus, the entire deal turns sweet for all employees.
- Need not pay for network hospitals
Most group insurance plans offer a list of registered hospitals where the sick employee or group member can get admitted without paying any bills. They only need to show the card provided by the insurance company. It is the insurance company which directly settles the bill. This is a huge monetary relief for any person.
- Easy claims
Even if it is not a cashless facility like the previous one; getting your claim passed is an easier and smoother operation here. The hassle involved with an individual plan claim is negligible here.
Group Health Insurance Cons
No plan can be perfect and neither are group insurance plans. It has several disadvantages attached to it as well. Few of them are:
- Lack of choice of plan or carrier
Since the plan is designed for the whole group on behalf of any organization, it is the organization head who decides on the carrier and type of insurance plan. You have no choice in either the carrier or plan. Much as you want, it cannot be tailored to meet your own personal needs. You must settle with whatever is on offer.
- Expensive for the young and healthy
Under group policy, all member needs to pay an equal amount of premium. Thus, while the senior people and people with existing medical condition benefit from it; the younger and the healthier class suffers and pays for the treatment of others. They need to pay a higher premium than they would have paid in an individual plan.
- Employer chooses to drop
The employer might choose to drop the policy at any time or even switch to a different plan with a different carrier. In such scenarios, you lose out on all your previously paid premiums. In case, the employer does not get another group policy; you might find yourself without any health insurance cover. This makes it essential that you have an individual health plan as well.
- Cover ceases as you quit the job
You might quit the job for any reason. Your health insurance cover ceases with your exiting the group and all previously paid premiums goes down the drains. Though you can continue with the policy for a limited period of about 18 months under the state continuation programs or COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985); you do not get adequate benefit or assurance of cover.
Bottom Line
While none can deny the benefit of group insurance plan; it is imperative that you have an Individual Health Insurance cover to be your backup and guaranteed protection cover. This will help compensate the drawbacks of the group insurance plans and you would always stay in the safe zone.
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