Small Group Health Plans

In most states, a small group health plan is a group insurance product covering 50 or fewer enrollees. In four states (California, Colorado, New York, and Vermont), small group plans are defined as group insurance arrangements covering 100 or fewer enrollees. The benefit design of small group health plans is regulated by the Affordable Care Act. For small groups seeking insurance coverage governed by large group rules, association health plans offer the possibility of multiple small groups collaborating on a single large group health insurance plan.

Whether small or large, a group health insurance plan is an medical coverage instrument where the members of a group (often a company’s employees) receive healthcare benefits at a more preferable cost than would be the case if similar insurance benefits were purchased by an individual alone. The lower cost for a group health plan can be the result of numerous factors from the greater predictability of claims within a group as compared to individual insurance to the greater leverage a group has with an insurer due to the higher revenue represented by the group coverage.

Employees in group health plans often benefit from an employer contribution toward the cost of the insurance coverage. This stands in contrast to individually purchased health insurance where an enrollee is responsible for the full monthly premium cost unless he or she has an income eligible for subsidization under the Affordable Care Act.