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Group Insurance Explained

Insurance is complicated. Most people don’t fully understand all the benefits or rules of the plans they have, but they do their best to muddle through and choose a plan that fits their needs. This makes it even more difficult when their employer starts offering other options such as supplemental coverage or group policies. For example, in small trucking companies group plans might be the more affordable options, but is it actually better for the employees? To figure that out, the employees need to understand what a group insurance policy is the first place.

What Are Groups?

In short, groups are three or more people who all belong to the same organization and receive insurance through that organization. It’s most commonly found in businesses that offer insurance options to their employees. These options qualify for certain perks and discounts, such as being funded with pre-tax dollars to save everyone money, lower deductibles, and shorter waiting periods because the insurance company can spread the costs among the group. This is how most people participate in insurance, and they don’t even know it!

How It Works

Group plans work a little differently than individual plans. Instead of going to the insurance marketplace and selecting a plan themselves, employees are presented with the options the company offers and given the opportunity to opt-in. This period is usually referred to as open enrollment, but new hires may also make their selections upon starting work if they’re hired outside of open enrollment. Companies might offer plans such as healthcare, vision, dental, short-term disability, or life insurance. Some companies will even pay the premiums on life insurance policies for the group as a thank you for choosing to work with them.

Once an employee opts into the coverages they’re interested in, they don’t have to worry about adding one more bill to their monthly stack because all of the payments and premiums are deducted straight from their paycheck. This ensures policies stay in force and are available if the employee needs them. It also saves them money in the long run if the plan is pre-tax because it leaves less money for the government to tax and can put more money in their pockets. If they leave the company, they have the option to convert their policy to an individual one, but then they will have to pay a higher premium so most people just adopt the options at their new job.


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