Large Group Health Insurance Plan

In group health insurance, the major division in types of insurance pertains to the number of plan enrollees within the group. The types are known as “large group” and “small group.”

A large group health plan, in most states, is group medical insurance that covers an employer or association with 51 or more employees. Four states require large group health plans to have at least 101 employees: California, Colorado, New York, and Vermont. In practice, insurers will look for at least 51 employees within the group that would be eligible for plan participation. Consequently, certain types of workers within the group, such as temporary workers and contractors, might not be counted toward the 51 employee threshold.

Fully-insured large group health plans are required by law to spend less on profit, administration, and marketing than small group health plans. 85 percent of premiums for a large group health plan must be spent on medical care and quality initiatives, leaving 15 percent of premiums to cover all other overhead costs for administration, marketing, and profit. In contrast, fully-insured small group plans can spend 20 percent of premiums on profit, administration, and marketing.

For more information on the advantages of large group health plans, see our article “Large group health plans vs. small group health plans.”