Group Health Insurance and Related Coverages
How group underwriting works
Group insurance underwrites the group rather than the individual. The insurer issues a master policy to the employer and a certificate to each participant. Key characteristics: a defined eligible class, an eligibility (probationary) period before coverage begins, and actively at work requirements. In a contributory plan, employees pay part of the premium and typically 75% of eligible employees must participate; in a noncontributory plan, the employer pays all and 100% must be covered. Larger groups are experience rated; smaller groups may be community rated.
Related coverages
Group term life is usually a multiple of salary, and coverage in excess of $50,000 produces Table I income to the employee. A conversion privilege lets a terminating employee convert to an individual policy without evidence of insurability, generally within 31 days. Group disability, dental, and vision follow similar enrollment rules.
Federal rules
COBRA applies to employers with 20 or more employees: 18 months of continuation normally, 36 months for dependents in certain events, a 60-day election window, and a 45-day premium grace. HIPAA portability provides certificates of creditable coverage. FMLA requires continuation of coverage during leave. Cafeteria plans (§125) allow pre-tax premium payment, and FSAs, HSAs, and HRAs are tax-advantaged accounts with different rules. Self-funded plans are generally governed by ERISA rather than state mandates.
Trap and rule of thumb
COBRA does not apply to employers under 20, and the conversion deadline is often 31 days - not 60. Rule of thumb: contributory = 75% participation; noncontributory = 100%.