A group health insurance plan is most often attributed to an employee purchasing health insurance from an employer, as about 60 percent of the working population does in the United States. While there are some common exceptions to the rules governing group health insurance premiums and coverage, most group plans and the coverage offered are the same. All group plans offer benefits such as medical, dental, prescription and hospital coverage in addition to some policies that also offer life, short-term disability, and long-term disability coverage as well.

When an employer contracts with a health insurance company to offer employees health coverage, that employer does so with the understanding that the amount of coverage and discounted premiums for the coverage is only made available if a set number of employees enroll for that coverage. Otherwise, the group premium rates are typically higher. The price the employee pays for the health coverage is typically deducted from his or her paychecks.

This discounted coverage for a health insurance plan works much like a volume discount would apply to wholesale goods orders. For example, a business owner purchasing between 10 and 20 pieces would receive a 10 percent discount off the total order price and that same business owner purchasing between 20 and 30 pieces would receive a 15 percent discount off the total purchase price. According to most state laws, for a business to buy group health insurance at a group rate, that business must employ at least 100 people; otherwise, that employer does not qualify to buy the coverage for its employees at the discounted rates.

Every health care policy offered to employees must be the same; the only thing that changes is what an employee elects to buy. If an employer has 100 employees and each employee elects to buy group insurance from that employer, the employer cannot offer one employee only medical but offer another medical and dental. Both employees must have access to the same coverage; otherwise, the insurance company supplying the coverage can offer less coverage or not offer coverage at all.

Common exceptions include if an employee does not buy every benefit offered. He or she can choose to buy only one of the benefits with no penalty suffered by the employer or employee for doing so. If an employer offers 100 employees the same medical, dental, and prescription coverage, one employee may choose to buy medical and another can buy all three with no penalties from the insurer. Overall, the rules applied by group health insurance plan coverage are designed to help the employees, making it easier to obtain and keep coverage.