Group and Employer Plans
Groups of people who have something in common other than their need for insurance often can join forces to purchase group health insurance. For example, individuals who all work for the same employer may join a group health insurance plan sponsored by their employer. Group plans typically have lower administrative costs than do individual health insurance plans, so they are able to charge individual subscribers lower monthly premiums. They also offer significant tax advantages in the United States.
Approximately two-thirds of American families obtain health insurance coverage through employer-sponsored group plans. Employers usually cover some or all of the cost of group health insurance for plan participants. Most employer-sponsored programs are with managed care programs, although many employers offer workers a choice of managed care or fee-for-service plans.
The Consolidated Omnibus Budget Reconciliation Act (COBRA), enacted by the U.S. Congress in 1985, requires most U.S. companies to allow employees, their spouses, and their dependent children to stay on the company’s medical plan after eligibility would normally end. This law requires companies to provide health coverage to workers who are laid off, to ex-spouses of workers after a death or divorce, to children of workers who reach the plan’s cutoff age, and to others in certain circumstances.
However, COBRA allows the terms of plan participation to change, so companies almost always require participants in these circumstances to start paying the full cost of coverage. Nevertheless, COBRA provides many people with important safeguards. Under the provisions of COBRA, health insurance coverage continues without interruption, the cost may be substantially less than an individual plan, and coverage is guaranteed to be available for either 18 or 36 months (depending on the event that qualified the individual for COBRA benefits in the first place). In addition, this coverage continues regardless of any changes in the beneficiary’s health conditions. The regulations outlined in COBRA also apply to workers covered by self-insured plans.
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