Group health insurance is one of the most important benefits employers offer their employees. Under the Affordable Care Act (ACA), companies with 50 or more full-time employees must offer affordable health coverage that provides minimum value to full-time employees and their dependents, or they may be subject to an “employer shared responsibility” payment to the IRS.
Larger employers have the incentive to offer health coverage as part of their benefits package. But how good is group health insurance compared to Marketplace plans?
How Does Group Health Insurance Differ From Marketplace Insurance?
Marketplace Insurance
The Health Insurance Marketplace is a service operated by the federal government (or state government in some cases) to help people shop for and enroll in a health insurance plan. When you apply for individual or family health coverage through the Marketplace, you provide certain information about your household and income. Based on that information, you can find out if you qualify for premium tax credits and other savings that make individual health insurance more affordable.
Group Health Insurance
A group health insurance plan provides health coverage to a group of members, typically employees of the same company. Members usually get their health insurance at a reduced cost because the insurer’s risk is spread out over a group. This type of insurance cannot be purchased by an individual. A group health plan requires a minimum of 70% participation by group members. Coverage may be offered in tiers, in which policyholders have the option to go with basic coverage or additional coverage with add-ons. Premiums are split between the company and the employee according to the particular plan.
Which Is Better – Marketplace Insurance or Group Health Insurance?
Group health insurance has long been considered a valuable employee benefit. The cost is typically reduced for the group and the employer is responsible for a portion of the premium. However, the annual cost of group health insurance is rising, while the cost of individual health insurance is decreasing in many states. Under the Affordable Care Act, an individual Marketplace plan may be more affordable than group health insurance.
Under the ACA, insurance companies can only consider five specific factors in determining health insurance premiums for individuals:
- Individual vs. family enrollment
- Age
- Tobacco use
- Location
- Plan category
They are prohibited under the law to factor in sex or medical history in setting rates.
Marketplace individual plans have other advantages in addition to cost savings:
- They allow you to choose your plan and insurance company.
- You have the option to renew your coverage or change your health plan or insurance company during open enrollment.
- You can select a plan that allows you to see your providers of choice.
- Your health plan is not tied to your employment – you can switch jobs without losing health coverage.
- You may be eligible for a federal subsidy to offset the cost of your individual health plan.
If you are uncertain whether to go with group health insurance or an individual Marketplace plan, speak with our experienced agent. We can help you determine which is the best option for you.