The Guide

Family Health Insurance

Splitting Family Members On Your Group Plan

When the company that you work for offers you medical insurance under an employer-sponsored health plan, they will often give you the opportunity to add family members to your coverage. In many cases, adding dependent family members must be done at the full expense of the employee. Larger companies may offer to pay all, or part, of the additional premium incurred when you elect to enroll family members. By law, they are not required to pay any portion of the premium for dependents, but they are responsible for paying a portion of the employee-only premium. The amount that the employer pays for the employee's health insurance is called the "employer contribution." The balance is what the employee will be responsible for if they accept coverage and enroll as an insured member under the group health plan. This is called the "employee contribution."

Compare Rates Based on Employer Contribution for Dependents

If your employer is generous enough to pay at least 50% of the premium for any family member, adding your family members to your group coverage will probably be the logical choice. However, you still want to compare your total employee contribution for adding family members to the other options available for providing your family with health insurance. If your employer does not pay any portion of the dependent premium, you will likely be able to save money by insuring your family members under a separate individual health insurance policy. Rates under a group health plan can often be more expensive than those offered for individual health insurance in the same market. This depends on the type of coverage that your employer is offering, the overall healthiness of your group, the average ages of the employees insured under the group plan, and the geographical location of those employees.

Separate the Cost for Each Family Member

Once you are provided with your group health plan options and rates, you want to separate the cost of insuring each family member under the group health plan. This will help you determine if more reasonable options are available on the individual health insurance market. Request that your employer provide you with a full breakdown of the various rate combinations. You will want to see your share of cost for the following options:

• Employee Only - The cost of insuring only yourself under the group plan and not adding family members. If your employer pays 100% of the employee only premium, this amount should be $0.
• Employee and Spouse - The cost of only insuring yourself and your spouse on the group policy, and not your children.
• Employee and Child(ren) - The cost of insuring yourself and your child or children on the group plan, and not your spouse.
• Employee and Family - The cost of insuring yourself and all dependent family members on the group plan.

Having the rates for all of these possible combinations will allow you to determine your share of cost for each family member that you want to add to your group health plan. If you are just provided the "Employee and Family" rate, you will not be unable to calculate the per family member premium. Use the formulas listed below to calculate your additional share of cost for each family member:

• Spouse = "Employee and Spouse" minus "Employee Only" premium
• Child/Children = ("Employee and Child(ren)" minus "Employee Only" premium) / (number of children)
• All Family = ("Employee and Family" minus "Employee Only" premium) / (1 + number of children)

Request Quotes for Individual Plans

You will now want to request quotes for individual health plans from various insurance companies in your state in order to compare those to the employee contribution amounts for adding family members to your group health insurance policy. Use the methods described in Splitting Family Members on Separate Individual Health Plans, to get the premium break down for the various family combinations available through an individual plan.

Consider the Out-of-Pocket Maximums

The annual out-of-pocket family maximum is another important factor to consider prior to deciding if it is best to insure your family members under your group policy or put them on separate individual plans. All health plans, be they group or individual policies, will have a family out-of-pocket maximum. View your group plan details to find out what this amount will be. All health plans will have a set individual out-of-pocket maximum and some plans will have a 2-member or 3-member annual out-of-pocket maximum for families. The out-of-pocket maximum is the most that you will need to contribute toward your deductibles, coinsurance and co-payments for medical services that are provided under your insurance coverage. Once you have reached your out-of-pocket maximum, you will be covered in full for the remainder of the year. If two or three family members reach this maximum (depending on your policy terms) all remaining family members will also be covered at 100% for the remainder of the year. It is not common for more than one family member to reach their individual maximums, but this is still a possible situation that you should consider prior to insuring your family under more than one policy.

There may be considerations other than cost that help you decide if you should add your family members to your group insurance, or insure them under individual policies. Some of these considerations are discussed in Section 6, The Pros and Cons of Group vs. Individual Individual Health Insurance Quotes.

Note: The information and advice provided in this Guide to Family Health Insurance may not provide the best advice for every situation. The best options for your family's medical insurance may be unique and require the advice of a local advisor. We highly recommend that you consult with more than one insurance broker in your state to gather and compare alternative opinions. The owners of HealthInsuranceFinders.com are not responsible for any decisions you make in regards to your family's health insurance through the information provided in this guide.

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