Group Health Insurance
www.ktwealthgroup.comKempson & Tschopp, LLC V. Cullen Kempson, CFP® Edmund D Tschopp, CFP® 350 Sparta Ave. - #B5 Sparta, NJ 07871 973-726-4600 Tel
Table of Contents
Group Health Insurance ... 3
When you apply, timing is everything ...3
The benefits of group coverage ... 3
The drawbacks of group coverage ...3
What you should look for in a group policy ... 3
Wealth Strategies Group
Page 2 of 5
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Group Health Insurance
With group health insurance, a single policy covers the medical expenses of many different people. Unlike individual insurance, where each person's risk potential is evaluated to determine insurability, group health insurance allows all eligible members of the group to be covered by one policy, regardless of their age or physical condition. The premium for group insurance is calculated based on the characteristics of the group as a whole, such as average age and degree of occupational hazard.
When you apply, timing is everything
Many employers offer group health insurance as part of their employee benefits package. Other groups that may offer such coverage include churches, clubs, trade associations, chambers of commerce, and special-interest groups.
Although your individual health is generally not evaluated when you apply for group health insurance, you must apply during the specified eligibility period. For employer-sponsored health insurance, this is often the first 30 days of your employment or the first 30 days following your initial probationary period. For insurance offered by an association, this may be the first 30 days of your membership in the group. Both employers and associations may also have an open enrollment period each year, during which you may sign up for coverage, modify your existing coverage, or add dependents to your coverage. There are also time limits for adding dependents (e.g., within 30 days of marriage or the birth of your child).
The purpose of the eligibility period is to reduce insurance costs by preventing people from waiting until after they discover a health problem to sign up for coverage. If you fail to enroll during this period, the insurance company has the right to treat you as though you were applying for individual insurance. This means you'll probably have to answer extensive health questions and submit to a physical examination. The insurance company can then decide whether or not to insure you.
The benefits of group coverage
Under a group health insurance plan, the insurance company agrees to insure all members of the group,
regardless of their current physical condition or health history. The only requirement is that group members apply for insurance within the specified eligibility period. Clearly, group health insurance is beneficial for those with chronic health conditions who otherwise might be unable to get individual insurance.
Group health insurance is somewhat less risky for insurers than individual insurance, since the risk is spread out among a larger number of people. Within a fairly large group, it's almost certain that the good insurance risks will equal or exceed the bad ones. Because only one policy is issued for the entire group, the cost of establishing and administering group coverage is lower than the cost of issuing an individual policy to each person. This means it generally costs less for you to purchase. And in many cases, your employer or association will pick up some or all of the premiums, making group insurance even more affordable.
The drawbacks of group coverage
In a group insurance situation, the provisions of the policy are negotiated between the insurer and the master policyowner (usually an employer or association). Therefore, you can't customize your policy. You don't have the freedom to pick and choose provisions, and your deductible amount and co-payment percentage are determined in advance. In some situations, however, you may be able to choose between two or more insurance plans.
What you should look for in a group policy
Sometimes you have to take what you can get, but if possible, look for an insurer that's financially stable--one with an "A" or "A+" rating from A. M. Best, Moody's, or Standard & Poor's. It does you no good to have a great
. See disclaimer on final page
insurance policy if your company goes belly-up.
You'll also want to find a policy with the highest lifetime payout possible. Policies with unlimited payouts are less common these days, but anything less than $1 million may be insufficient to cover you in the event of a
catastrophic illness.
If you do have a choice between two offered plans, you'll want to think about the limits you set on your out-of-pocket costs. Also, most employer groups review and compare differences in the health policies they provide to their employees, so check with your benefits or compensation manager to get comparable information about the different plans and covered benefits offered. Many managed care companies and other insurance carriers will send you free marketing brochures about the plan benefits. Lower deductibles and co-payments mean that your costs will be lower if you actually do get sick, but you'll pay dearly for this protection. By agreeing to higher deductibles and co-payments, you can cut your insurance premiums dramatically. As long as you retain a reasonable out-of-pocket maximum, you shouldn't have to worry about your medical costs getting out of hand.
Wealth Strategies Group
Page 4 of 5
. See disclaimer on final page
www.ktwealthgroup.com
Wealth Strategies Group
Kempson & Tschopp, LLC V. Cullen Kempson, CFP® Edmund D Tschopp, CFP® 350 Sparta Ave. - #B5 Sparta, NJ 07871 973-726-4600 Tel
The accompanying pages have been developed by an independent third party. Commonwealth Financial Network is not responsible for their content and does not guarantee their accuracy or completeness, and they should not be relied upon as such. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your adviser.
Commonwealth does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. Securities and Advisory Services offered throughCommonwealth Financial Network, member FINRA /SIPC, A Registered Investment Adviser.
