What is a "group health insurance plan"?

A group health insurance plan refers to insurance coverage that is provided to a collective group of individuals, often linked by a common factor such as employment by the same organization or membership in a particular association. This setup allows the group to obtain health insurance at a reduced rate compared to individual plans, as the risk is spread across multiple participants.

Group plans typically offer several benefits, including cost-sharing arrangements and often more comprehensive coverage options than individual plans. Members of the group usually enjoy lower premiums due to the larger pool of insured individuals, helping to diffuse the financial risk for the insurer. This collective model is foundational in employer-sponsored health insurance, where coverage is offered to employees and their dependents.

In comparison, individual policies sold separately do not leverage the benefits of being part of a group, and plans that offer lower deductibles for larger families focus more on the structure of cost-sharing rather than the collective nature of coverage. Insurance that applies only to a specific age cohort misses the broader applicability of group health coverage.