How do group health plans work?

Group health plans are insurance plans usually offered through an employer that provide health coverage to employees and their eligible dependents. A group health plan typically makes up a large part of an employee's benefits package. You can enroll in your employer's group health plan when you are first hired, during an open enrollment period, or if you experience a qualifying life event (for example, your spouse loses his or her health insurance plan under which you were covered).  Other group plans may be offered by organizations such as unions, fraternal organizations, professional organizations or religious associations. By evaluating health risks to group members as a whole rather than as individuals, group policies keep costs down for the policy holder and for many of the members of the group.

Most group health plans will pay a large percentage of your healthcare costs, while requiring certain payments from you including a yearly deductible and copayments. Depending on your employer, you may have a choice of one or more types of group health plans. Those options may include:
  • A Health Maintenance Organization (HMO) plan. A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO to form a network of providers. The plan generally won't cover out-of-network care except in an emergency. An HMO may require you to live or work in its service area to be eligible for coverage. HMOs often provide integrated care and focus on prevention and wellness.
  • A Point of Service (POS) plan. A type of plan where you pay less if you use doctors, hospitals, and other health care providers that belong to the plan’s network. POS plans require you to get a referral from your primary care doctor in order to see a specialist. If a large employer (with more than 50 employees) offers only an HMO plan, the law requires the HMO to make a point-of-service option available to allow employees to see out-of-network doctors in exchange for paying more out of pocket.
  • A Preferred Provider Organization (PPO) plan. A type of health plan where you pay less if you use providers in the plan’s network. You can use doctors, hospitals and providers outside of the network without a referral for an additional cost.
  • An Exclusive Provider Organization (EPO) plan. A managed care plan in which services are covered only if you use doctors, specialists or hospitals in the plan’s network (except in an emergency), but unlike HMOs do not require patients to get referrals for services beyond primary care.
Be sure to talk to the benefits administrator or human resources representative at your workplace about the best plan options for you and your family. 

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Important: This content reflects information from various individuals and organizations and may offer alternative or opposing points of view. It should not be used for medical advice, diagnosis or treatment. As always, you should consult with your healthcare provider about your specific health needs.