There are basic differences between group insurance and individual health insurance coverage. With an individual policy you are purchasing directly from the insurance company. With a group health insurance policy, the group is the master insured and the insurance company contracts directly with the group, not you the individual. As a participating member of the group you are issued an insurance certificate, which acts as your policy.
When you are part of a group plan you will most likely be paying less than if you were to buy the exact same coverage directly from the insurance company itself. In the case of special insurance coverage options you would pay much more as an individual then you do as a group. There are common types of insurance that fall into the group category. They may include:
Fully insured employer group—This type of insurance coverage is contracted directly between the employer and the insurance company and provides certificates to each individual covered employee. Typically they are an HMO or major medical insurance plan.- Small employer group—This type of insurance coverage is lumped together with other small employers to form a larger group. A larger group allows the insurance company to better predict the cost of providing insurance. This makes the insurance coverage options available at better savings. Each small employer gets the same exact policy provisions.
- Large employer group—This type of insurance coverage is the same as the fully insured employer group.
- HMO (Health Maintenance Organization)—This group program provides a full range of medical services to its group participants. The organization calls the participants ‘enrollees’ and these enrollees are either assigned a doctor or they choose from a group of general practitioners. You have to go through your assigned doctor for referral to specialists.
- Self-funded ERISA—This type of insurance coverage is available to large groups. This group would contract with a third-party administrator (probably the same one that might handle their payroll) or directly with the insurance company. They cover all the costs associated with the operation of the insurance plan itself, including the administration costs.
- Association group—This type of group is similar to a fully insured employer group with the exception that they are not an employer but instead a church group or other association.
- Group managed care—This type of insurance is long-term health insurance plan that allows for more freedom in choosing doctors and allowing for visits to a specialist without a referral.
Preferred provider organization (PPO) —This type of insurance usually allows you to choose from whatever doctor or other health care providers you wish with substantial savings on co-pays and deductibles when you choose from a list of preferred providers.
