There is power in numbers, especially when it comes to health insurance. If your health coverage is offered through your employer, you are part of roughly 162 million Americans who have a group health insurance plan.

Generally, a key benefit to group health plans is cost. When you are part of a group health plan, "risk" is spread among coworkers. In other words, the healthy individuals in the group subsidize those who have health-related problems. If your workplace is mostly young, healthy individuals, you could be getting a great price no matter what your own health is like. If you happen to belong to a small group with several people who visit the doctor frequently, that pushes up the price for everyone.

The Kaiser Family Foundation says premiums for employer-sponsored health plans increased by 5 percent in 2008. On the other hand, a report by Consumer Watchdog, a nonprofit consumer advocacy group, found that prices for individual health insurance policies (meaning insurance you buy on your own) increased 10 to 50 percent.

Another key benefit of group health insurance is that insurers cannot reject you for health reasons.

Employers that have two or more employees are eligible to buy group coverage. In some states, the self-employed can buy group coverage as a "group of one." Employers select the specific benefits they want to include in the plan (and some benefits are mandated by the state where you live) and their choices then determine the group's final premiums.

According to the Employee Benefits Research Institute, workers paid about 20 percent of the cost of employee-only coverage (an average of $52 per month) and about 26 percent of the cost of family coverage (an average of $248 per month) in 2006. Employers pay the rest of the tab.

But don't assume that a group plan's price is the best you're going to get. Compare prices for an individual health insurance plan, too. For example, if your group plan is loaded up with numerous health benefits mandated by your state or selected by your employer — benefits you don't want or need — you could save substantial money in the individual market by selecting a plan with only the coverages you want.

If you lose your group health insurance due to a lay-off, the federal COBRA law lets you continue buying the same health plan for up to 18 months. Know your COBRA rights.

Here are some steps that will help you continue your group health plan through COBRA:

• You should be sent a COBRA Continuation Coverage Election Notice with your final documents. The documents should provide an explanation of your health insurance and how much your monthly cost will be to continue the plan under COBRA.
• Review the information including your “Certificate of Credible Coverage” and make sure the information is correct, including your name, current address and phone numbers. Fill out the enrollment form and submit it to your HR director. You can also register through the Web site mentioned on the forms or contact your insurance provider’s COBRA customer hotline.
• You will receive a notice in the mail explaining the terms and conditions of your plan and you will be asked to start your monthly COBRA payments.
• You may also qualify for a federal COBRA insurance subsidy if you are involuntarily terminated from your job between Sept. 1, 2008, and Dec. 31, 2009. The subsidy applies to all employers that have group health insurance plans. The subsidy covers 65 percent of monthly COBRA premiums for employees and their eligible dependents up to nine months. However, the COBRA insurance subsidy is not retroactive for previously paid premiums before Feb. 17, 2009. Certain restrictions apply for singles and married couples whose annual income is between $125,000 and $250,000 or more. See additional information from the government about the COBRA subsidy.

Large vs. small groups

Large and small group health plans are subject to different laws. Most states define a "small group" as one to 50 or two to 50 employees; large groups are defined as those over 50 people.

When Congress passed the Health Insurance Portability and Accountability Act (HIPAA) in 1996, the law mandated that all policies sold in the small group market must be guaranteed issue.

Guaranteed issue for group health insurance means that an insurer must offer a policy to an employer, employee or dependent of the employee, regardless of claims history, pre-existing conditions or health status, according to NAHU. Although group insurers cannot refuse coverage due to a member's pre-existing condition, they can screen the medical history of group applicants and impose a waiting period before covering those conditions.

The plan must also be "guaranteed-renewable" unless there is nonpayment of premium or the employer has committed fraud or intentional misrepresentation or has not followed the terms of the contract.

In addition, a health insurer cannot impose more than a six-month look-back period or a 12-month exclusionary period for preexisting conditions on enrollees who do not have prior "credible coverage." The insurer must also cover an employee's pre-existing conditions as long as the employee did not have more than a 63-day break in health coverage.

Also, many people leaving group insurance for the individual market have federally mandated group-to-individual health insurance portability benefits. Read more about the HIPAA law.

More about health insurance mandates

Group health insurance plans that are fully insured are subject to state benefit mandates. (Self-insured employers are subject only to federal law; they pay claims themselves but often health insurers administer the plans.)

Most states such as California and New York mandate diabetic supplies and emergency services, and coverage for mammograms is mandated in all states except one (Texas). Coverage for such things as long-term care, morbid obesity and ovarian cancer screenings are not mandated in most states. This doesn't necessarily mean that your health insurance plan won't cover these services in states without a mandate. For a list of state health insurance mandates, go to the Council for Affordable Health Insurance.

Calculating premiums

Group health insurance premiums can be calculated differently for small versus large groups. In 38 states, small-group insurers use "medical underwriting" to determine rates. When a plan is medically underwritten, the insurer will usually ask enrollees to fill out medical questionnaires, take physical exams and, in some cases, review the applicants' medical histories. Pricing is then based on the group's medical factors.

In most states, premiums based on medical underwriting are limited to the average percentage of the state's small-group insurance rate, also known as a "rating band" requirement.

If your rating band requirement is plus or minus 25 percent, the rate an insurer sets can be no more than 25 percent above or below the average small-group rate for that geographic area. For example, if the average premium is $100, the small-group rate could be $75 to $125, based on the health status of all the group members. Some states that use rating bands limit price increases for individuals and groups at renewal time. At renewal, some states prohibit increases of more than 10 or 15 percent based on the group's health status or claims history.

Another rating system is "community rating," where insurers charge all groups in a certain geographical area the same premium regardless of ages or health status.

Large-group health insurance prices are based on the number of employees participating in the plan, the group's past claims history and the ages of members of the group. Employees are not required to fill out medical questionnaires.

Employers are the boss

Group health insurance is renewed annually at the employer's discretion. There is no federal or state law that requires employers to offer group health insurance; however, when they do, the plans are then subject to state and federal laws.

Most workplaces use an open enrollment period each year, which is the period of time in which employees can enroll in the plan or change coverage.

Unlike individual health and short-term health plans that you can buy on your own, group health plans fall under the Health Insurance Portability and Accountability Act (HIPAA) and the Consolidated Omnibus Budget Reconciliation Act (COBRA).