Group Health Insurance
Employer-sponsored health coverage provided to employees and their dependents under a single group policy.
What is Group Health Insurance?
Group health insurance is a health coverage plan purchased by an employer, association, or organization and offered to its eligible employees or members and their dependents. Because risk is spread across a pool of people, group plans typically offer lower premiums than individual market policies and often include broader coverage. Under the Affordable Care Act, employers with 50 or more full-time equivalent employees (Applicable Large Employers) are required to offer minimum essential coverage or face penalties. Employers typically pay a portion of the monthly premium — the ACA requires at least 50% employer contribution in most cases — and employees pay the remainder through pre-tax payroll deductions.
Example
A company with 100 employees negotiates a group health plan with a $500 monthly premium per employee. The employer contributes $350 (70%) and the employee contributes $150 (30%) per month via pre-tax payroll deduction. The employee saves approximately $45 per month in taxes compared to paying with after-tax income, while the employer deducts its contributions as a business expense.
Source: Centers for Medicare & Medicaid Services — Employer Coverage