Who May Be Covered Under a Group Health Plan?
Understand the various categories of individuals covered by a group health plan and how eligibility evolves over time.
A Group Health Plan provides health coverage to a group of individuals, typically employees of a company or members of an organization. These plans are usually sponsored and purchased by an employer, who then offers the coverage to their employees and often their families. Group health plans allow members to receive insurance at a potentially reduced cost because the insurer’s risk is spread across a larger group of policyholders.
Employee Eligibility
Eligibility for a group health plan depends on an individual’s employment status with the sponsoring organization. Employers establish criteria for employees to qualify for coverage, which may differentiate between full-time and part-time workers. Many plans require employees to work a minimum number of hours per week, such as 30 or more, to be considered full-time and eligible for benefits.
New employees commonly encounter waiting periods before their health coverage can begin. These periods typically range from 30 to 90 days from the date of hire. Waiting period rules are outlined in the employer’s Summary Plan Description (SPD) or official plan documents.
Another common requirement is “active employment,” meaning employees must be actively working to maintain their eligibility. This condition ensures that coverage is tied to an ongoing employment relationship. Employees on extended unpaid leave might find their eligibility suspended or terminated, unless specific plan provisions or legal requirements dictate otherwise.
Dependent Eligibility
Group health plans commonly extend coverage to an employee’s eligible dependents. A dependent typically includes a legal spouse.
Children are also widely considered eligible dependents, encompassing biological children, legally adopted children, and stepchildren. For children, the Affordable Care Act (ACA) mandates that health plans offer coverage up to age 26, regardless of their student status, marital status, or residency.
Provisions may exist for covering children with disabilities who exceed the age limit of 26, allowing continued coverage if certain criteria are met. Some group health plans may also offer coverage for domestic partners.
Special Enrollment Rights
Certain life events allow individuals to enroll in a group health plan outside of the usual initial eligibility period or annual open enrollment window. These “qualifying life events” provide special enrollment rights to employees and their eligible dependents.
Marriage is a common qualifying life event that triggers a special enrollment period for the newly married employee and their spouse. The birth, adoption, or placement for adoption of a child also grants special enrollment rights.
The loss of other minimum essential coverage is another significant qualifying event. This can occur due to various circumstances, such as losing coverage through a spouse’s job, a divorce or legal separation, or a child aging off a parent’s plan. For most qualifying life events, individuals typically have a limited timeframe from the date of the event to exercise their special enrollment rights.
Continuation Coverage
Continuation coverage allows individuals to temporarily extend their group health plan benefits after their regular coverage would normally end due to specific events. The Consolidated Omnibus Budget Reconciliation Act (COBRA) is the federal law that provides this right, aiming to bridge gaps in health coverage.
COBRA applies to group health plans maintained by private-sector employers with 20 or more employees. Qualifying events for COBRA coverage include termination of employment for reasons other than gross misconduct, reduction in hours, death of the covered employee, divorce or legal separation from the covered employee, or a dependent child ceasing to be a dependent under the plan’s rules. Both the employee and their dependents who lose coverage due to such events may be eligible.
The duration of COBRA coverage varies depending on the qualifying event. For job loss or reduction in hours, coverage typically lasts for 18 months. However, for other events like the death of the employee, divorce, or a child aging off the plan, spouses and dependent children may be eligible for up to 36 months of coverage. In some cases, a disability determination can extend the 18-month period to 29 months.
Individuals electing COBRA are generally responsible for paying the full cost of the premium, which includes the portion previously paid by the employer, plus an administrative fee. This can make COBRA significantly more expensive than active employee coverage, with average monthly premiums ranging from $400 to $700 per person. Some states have “mini-COBRA” laws that extend similar continuation rights to employees of smaller businesses not subject to federal COBRA, or provide longer coverage periods.