The terms 'group health plan' and 'group health insurance plan' are often used interchangeably, but in fact, they mean different things. This article provides the definitions of a group health plan vs. a group health insurance plan.
Group Health Plan Definition
A group health plan is an umbrella term, encompassing a number of different kinds of employer-provided benefit plans.
A group health plan is defined as an employee welfare benefit plan established or maintained by an employer or by an employee organization (such as a union), or both, that provides medical care for participants or their dependents directly or through insurance, reimbursement, or otherwise.
Most private-sector group health plans are covered by the Employee Retirement Income Security Act (ERISA). Among other things, ERISA provides protections for participants and beneficiaries in employee benefit plans (participant rights), including providing access to plan information. Also, those individuals who manage plans (and other fiduciaries) must meet certain standards of conduct under the fiduciary responsibilities specified in the law.
As such, many refer to these type of plans as ERISA group health plans.
Here are a few examples of group health plans:
- A group health insurance plan (defined below)
- A self-insured health plan
- A self-insured medical reimbursement plan (ex: Section 105 Plans "for Dummies")
Group Health Insurance Plan Definition
A group health insurance plan is a type of group health plan that provides actual health insurance coverage.
A group health insurance policy is purchased by an employer (or employee organization) and is offered to eligible participants, and to eligible dependents of participants. With group health insurance, the risk is spread over the company -- the number of participants covered. There are several types of group health insurance plans including HMO, PPO, etc.
Group health insurance is also known as employer-sponsored health insurance or job-based health insurance.
In other words, a group health insurance plan is a group health plan, but a group health plan is not always a group health insurance plan.
What questions do you have about a group health plan, or about group health insurance plans? Leave a comment.
See related articles:
- Fully-Insured vs. Self-Insured (Self-Funded) Health Plans
- Comparison of Individual Health Insurance vs. Group Health Insurance