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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

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Forming a group for insurance

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email

Q: Our employer does not offer health insurance. Can a group of employees get together and form a group in order to obtain group insurance?

A: Yes, it is possible if the employer is willing to provide the documentation and perform administrative tasks required by group health insurance companies. Your question is based on the unstated premise that group health insurance is a better deal than individual health insurance. This is true for a relatively few number of employees but it is not true for the majority of employees. An "average" worker can find individual health insurance that is more attractive on a cost/benefit perspective if the employee is paying the cost. Group health insurance is great for its guaranteed issue provisions and all-encompassing coverage, but the average cost per covered employee is more than twice the cost of the average individual health insurance. But assuming that you do want to go this route, the best way is to first have the employer establish a flexible spending account benefit plan. This allows employees to voluntarily set aside pre-tax money to be used to pay for the health insurance premium. Any available health insurance may be used. Group insurance policies have eligibility and participation requirements that vary widely, so it is not possible to make a pre-determination as to whether your group will qualify for a specific insurance policy. The key issue is to reconcile the firm's UC2 report (Quarterly state unemployment tax return) with the group applying for health insurance. Benefits professionals are able to assist with this task.


More resources:

Freedom Benefits Association Flexible Spending Account Forming a group for health insurance