Who May Be Covered Under a Group Health Plan?

A group health plan provides healthcare coverage to a collective of individuals, most commonly employees of a company or members of an organization. This type of health insurance is typically offered by employers as a valuable benefit, distinguishing it from individual health insurance plans that individuals purchase directly. Group plans often feature more affordable premiums because the financial risk is distributed across a larger pool of participants. Employers typically contribute to the cost of these premiums, making coverage more accessible and cost-effective for employees.

Core Employee Eligibility

Eligibility for group health plan coverage primarily revolves around an individual’s employment status with the sponsoring organization. Most group health plans require employees to meet specific criteria, such as working a minimum number of hours per week to be considered full-time. A common threshold for full-time status is 30 hours per week, although this can vary by employer and plan design. Many plans also impose a waiting period before new employees become eligible for coverage, typically ranging from 30 to 90 days after their start date. Federal regulations generally prohibit waiting periods from exceeding 90 days.

Part-time, temporary, and seasonal employees often have different eligibility rules or may not qualify for group health benefits. While federal law does not mandate health insurance for part-time workers, some employers choose to offer it, often setting their own minimum hourly requirements, such as 20 hours per week. Eligibility depends on company policy. Contract workers are generally not eligible for employer-sponsored group health plans.

Business owners and partners can also be covered under a group health plan. Specific rules apply depending on the business structure. For a business to qualify for group health insurance, it generally needs at least one qualified full-time employee who is not the owner or a family member of the owner. Legitimate employment with W-2 employees on payroll is typically required for obtaining group coverage.

Dependent Eligibility

Group health plans extend coverage beyond the primary employee to eligible dependents. The most common dependents include spouses and children. For children, the Affordable Care Act (ACA) mandates that plans must allow adult children to remain on their parent’s plan until they reach age 26, regardless of their student status, marital status, or financial dependency.

Children with disabilities who are unable to self-support due to their condition may be eligible for coverage beyond the age of 26, provided their disability began before the traditional age limit and they remain dependent on the covered employee. While coverage for domestic partners is not universally mandated, many group health plans do offer this option. Specific definitions and requirements for dependent eligibility vary based on the group health plan’s terms and applicable state regulations.

Special Enrollment Rights

Individuals already eligible for a group health plan, whether as an employee or a dependent, can enroll or make changes to their coverage outside the standard open enrollment period under specific circumstances known as “qualifying life events.” The timeframe for exercising these rights is limited, typically requiring action within 60 days of the qualifying event.

Common qualifying life events include marriage, the birth of a child, or the adoption or placement for adoption of a child. Losing other health coverage, such as due to job loss, reduction in work hours, divorce, or aging out of a parent’s plan, also triggers special enrollment rights. These provisions help prevent gaps in health coverage during significant personal transition.

Continuation of Coverage

Individuals may maintain their group health coverage for a limited period after certain events that would otherwise lead to a loss of eligibility. The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that provides this right to continuation coverage. COBRA generally applies to group health plans sponsored by employers with 20 or more employees. It requires these plans to offer temporary continuation of coverage to employees and their families when coverage would otherwise end due to specific “qualifying events.”

Qualifying events for COBRA include termination of employment for reasons other than gross misconduct, a reduction in the employee’s hours, the employee becoming entitled to Medicare, divorce or legal separation from the covered employee, or the death of the covered employee. A child ceasing to be a dependent under the plan’s rules, such as by reaching age 26, is also a qualifying event. The duration of COBRA coverage varies by the type of qualifying event; for employment termination or reduction in hours, coverage typically lasts 18 months. Other events, such as divorce or the death of the employee, can allow for up to 36 months of coverage for dependents.

COBRA coverage is expensive because the individual electing it must pay the full premium, which includes both the portion previously paid by the employer and the employee’s share, plus an administrative fee, often totaling 102% of the plan’s cost. Many states also have “mini-COBRA” laws that extend similar continuation rights to employees of smaller businesses, typically those with fewer than 20 employees. These state laws may offer longer coverage periods or broader eligibility than federal COBRA.