In a group plan all eligible employees are included regardless of physical condition or age.  In an individual policy a person is evaluated separately in terms of risk.

The main condition for inclusion in a group plan regardless of physical condition is that they must apply for coverage during the specified eligibility period.  If they fail to enroll during that period, there may be a requirement to take a physical examination and be evaluated on an individual basis just as if the policy were an individual policy.  Usually an initial 90 day employment period is typical for group coverage, after which the employee has a 31 day eligibility period.
 
The reason the insurer can afford to cover a group of people without individual selection is that nearly all employees must join the plan.  Because the employer must have the agreed upon number of employees covered, the employer usually requires that employees join the plan unless otherwise covered by a spousal family plan. The requirement for a physical exam after the eligibility period helps to discourage delays in enrollment and keeps costs down.

The employer may award differing benefits to various groups within his company.  For instance, there might be certain benefits for those employed less than 5 years and another set of benefits for those employed over 5 years.  The employer may arrange benefits in any manner as long as it does not have an adverse effect on the insurer. Special benefit provisions must apply to everyone within the specified group who meet the criteria.  As soon as an employee qualifies for the new criteria he must automatically become eligible for the associated benefits.
Payment of Premiums - There are two different types of group plan, contributory and non-contributory.  If non-contributory, the employer pays the full cost of the premium, while the contributory type requires a shared cost between the employer and employee.

Contributory group plans require an employer to ensure a sufficient percentage of his employees are covered and paying premiums in order to qualify.   For a non-contributory plan, 100% of the eligible employees must be included.

The insurer will consider a number of factors when determining the group premiums.

Average age of the group - The higher the average age of the group, the more instance of potential claims resulting in a higher premium.
 
Maximum indemnity period for loss of time benefits - The longer an insurer pays disability benefits, the higher the rate.

Occupational illness and/or injury - If a group policy covers occupational illness and/or injury, the degree of occupational hazard becomes an important factor.  The higher the occupational hazard, the higher the rate.

Group policy types - Group health plans may include any of the types of insurance already discussed.

A group health insurance plan does not have to include all coverage however many will include two or more.  Additionally, disability income coverage may be offered, but it is usually separate from hospital, medical and surgical coverage.  Some common types of group coverage:


Provisions mainly unique to group policies:


Working Couples:

Often couples both qualify for group health insurance through their employment.  Most states have special provisions to prevent insured’s from receiving dual benefits  These provisions are referred to as Coordination of Benefits.  It allows as much coverage as possible while eliminating over insurance.  The receipt of dual benefits constitutes fraud and is punishable by law.






Terminated Employees:

Businesses that offer group coverage are subject to certain provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).  Terminated employees of companies that regularly employ more than 20 people may be eligible for extended group health insurance coverage after they leave their positions.

Under COBRA a departing employee may be eligible for continuation of group coverage at slightly higher rates for up to 18 months.  Dependents of deceased employees and in some special cases, coverage continuation may be available up to 36 months.

Usually when an employer discontinues a group insurance policy, employees must be given the chance to convert to an individual insurance without a medical examination.

Self-insurance

Large employers may contribute to  special funds to provide health benefits to employees   This is not insurance, but only a fund set up for the purpose of providing employees medical insurance coverage and is only viable for very large firms, such as a auto manufacturer.