Definition of "Group health insurance"

Amy  Medeiros real estate agent

Written by

Amy Medeiroselite badge icon

Blackstone/Ocean Properties

Coverage underwritten on members of a natural group, such as employees of a particular business, union, association, or employer group. Each employee is entitled to benefits for hospital room and board, surgeon and physician fees, and miscellaneous medical expenses. There is a deductible and a coinsurance requirement each employee must pay. Characteristics of group health insurance include:

  1. TRUE GROUP PLAN one in which all employees must be accepted for coverage regardless of physical condition. (For example, coverage cannot be denied because of a pre-existing condition such as cancer.) Usually an employee must apply and pay the first premium within the first 30 days of employment or he or she forfeits the right to automatic coverage (a form of GUARANTEED INSURABILITY). Individuals are covered under a MASTER CONTRACT, each receiving a certificate denoting coverage.
  2. Schedule of Benefits describes what the insured and his or her covered dependent (s) is entitled to in the event of disease, illness,or injury. After the insured or the covered dependent has satisfied the DEDUCTIBLE (defined as the first portion of all of the eligible expenses that occur during a calendar year of coverage), the insurance company pays a given percentage (usually 80%) until a total sum (stop loss), usually $5000, is reached for the calendar year. After the total sum has been reached, the insurance company pays100% of the total eligible expenses until the end of the calendar year subject to a maximum lifetime amount.
  3. Eligible Expenses include hospital bills, surgery, doctor's services, private nursing, medicines, and X-rays. Payment allowed for these and other expenses are spelled out in the policy. For example, the hospital's daily charge for room and board is subject to a specified maximum.
  4. Exclusions from Provisions of Medical Benefits many exclusions occur in group health plans, including benefits under Workers Compensation; certain mouth conditions; convalescent or rest cures; expenses incurred by a member of a HEALTH MAINTENANCE ORGANIZATION (HMO) or other prepaid medical plan; expenses associated with intentional self-inflicted injuries or attempt at suicide.
  5. COORDINATION OF BENEFITS when there are two or more group health insurance plans covering the insured, one plan becomes the Primary Plan and the other plan (s) becomes the Secondary Plan (s).
The Primary Plan is required to pay benefits due the insured and/or covered dependents before any other plan pays benefits. When a claim is made, the primary plan must pay the claim without regard to the benefits provided under any other plan. The secondary plan pays the difference between the total claim amount and the amount that the primary plan has paid, up to total allowable expenses.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Insurance Terms

Payment of that portion of the annual premium by the employee necessary to cover the PS-58 cost for that given year. Any unpaid premium balance for that particular year is paid by the ...

Measurement of how people feel about prevailing economic conditions, employment outlook, and personal finances. This index is based on statistics gathered from questionnaires mailed by the ...

Buy-sell agreements found in partnerships, sole proprietorships, and close corporations. Either the business entity or the surviving members of the business agree to buy out the interest of ...

Circumstance in which an insurance company can issue life or health insurance to an applicant based on standards set by the company. ...

Means of supplementing an executive's retirement benefits by deferring a portion of his or her current earnings. Deferring income in this manner encourages the loyalty of executives. To ...

Annuity that continues income payments as long as the annuitant lives, ceasing upon the individual's death. ...

Value of a foregone opportunity, one rejected in favor of a presumably better opportunity. For example, investment of a sum into a mutual fund instead of a variable annuity with a ...

Coverage for small groups that cannot meet the underwriting standards of true group insurance. Even though the franchise insurance covers an entire group, individual policies are written on ...

Entitlement of a pension plan participant (employee) to receive full benefits at normal retirement age, or a reduced benefit upon early retirement, whether or not the participant still ...

Popular Insurance Questions