The Difference Between Group Insurance & Blanket Health Policies

Let’s start by taking a more in-depth look at what group health insurance is. 

Usually employer-sponsored, this health plan covers full-time employees or members of an organization but can expand to the recipient’s immediate family, such as spouses and children and other eligible dependents. These are the insureds. 

In group health insurance, the employer or the organization takes on the role of a policyholder.  

They decide on the cost and coverage options of the plan, including anything from benefits and healthcare providers’ networks to additional features such as wellness programs or preventive care services. Policyholders also negotiate rates with insurance providers and decide on their contribution, as premiums are usually split. 

How much employers cover and the number of insureds per policy affects the total employee cost. For example, an extension of coverage, in terms of adding more insureds, typically comes at an additional cost, which is deducted from the employee’s paycheck. 

The good thing, however, is that the premiums for this type of plan are typically lower since the insurance provider’s risk is spread across many people. Since they are collected from employees’ paychecks pre-tax, they can serve as an incentive for employees, further saving them money and lowering their taxable income. 

Although it depends on the insurance company and the employer, the Kaiser Family Foundation 2022 Employer Health Benefits Survey shows that, on average, the annual premiums for employer-sponsored health insurance were $7,911 for single and $22,463 for family coverage.  

Employers covered approximately 83% of the total cost for single coverage and 72% for family plans. For smaller firms, the numbers were lower. 

In the past, some employees would receive higher premiums due to pre-existing medical conditions or wouldn’t get coverage altogether. However, under the Affordable Care Act (ACA), which ensures equal healthcare opportunities, they now enjoy the same rights as others. 

Once policyholders settle contractual arrangements, eligible workers can review the coverage options available within the employer group health insurance during the annual open enrollment period. Those who do not want to participate can choose another option, like an individual health plan.  

Their employer or organization oversees the following administrative tasks for those who enroll.  

Collecting premiums from their paychecks and facilitating the payment to the insurance provider goes to HR and accounting. They also handle the administrative tasks related to enrollment, terminations, and changes to coverage due to life events (e.g., marriage, childbirth, job change).