Who pays the premium in a group health plan?
In a group health plan, the premium is the amount that is paid to the insurance company in order to maintain coverage for the group. Premiums for group health plans are typically shared between the employer and the employees or members.
Employer Contribution: The employer usually pays a portion of the premium, typically the largest portion. Employers typically pay a percentage of the premium, a fixed amount per employee, or a combination of both. The percentage of the premium that the employer pays can vary depending on the specific plan and the employer's policies. Employers may also choose to pay more than the standard contribution, which is called fully-insured, to reduce the employee cost.
Employee Contribution: The employees or members pay the remainder of the premium through their own payroll deductions or monthly payments. The amount that employees or members pay depends on the specific plan, the employer's contribution, and the employee's salary. The employee's share of the premium could be a flat rate, a percentage of their salary, or a combination of both.
It's worth noting that some employers offer different plans and different levels of coverage and the cost will depend on the chosen option. Some employer also offer different levels of employee contribution and may adjust the employee's share depending on the chosen option.
In conclusion, in a group health plan, the premium is the amount that is paid to the insurance company in order to maintain coverage for the group. The premium is typically shared between the employer and the employees or members. The employer usually pays the largest portion of the premium, and the remaining portion is paid by the employees or members through payroll deductions or monthly payments. The specific amounts paid by the employer and employee will vary depending on the employer's policies, the specific plan and the employee's salary.
