Group contract
The group policy is the insurance structure on which the entire employer-sponsored health insurance plan is based. A single insurance contract is entered into between the employer (as the policyholder) and the insurer; the employees are the insured persons under this contract. This structure fundamentally distinguishes employer-sponsored health insurance from individual private supplemental insurance, in which each person takes out their own policy.
Why the group contract exists in the first place
The insurance logic behind this is simple: combining many policyholders under a single contract offers two advantages. First, it reduces the administrative burden on the insurer—one contract, one point of contact, one billing office. Second, it creates a sufficiently large and diverse risk pool in which young, healthy employees and older or pre-existing condition employees are statistically balanced. Both factors mean that group plans generally offer significantly more favorable terms and better benefits than comparable individual policies.
Minimum number of participants and mandatory attendance
To ensure risk diversification, insurers typically require a minimum number of participants. The thresholds vary widely:
- With some providers, supplemental health insurance is available for companies with as few as three employees
- Pricing plans tailored to small and medium-sized businesses often start at 10 to 20 employees
- Certain premium plans require 50 or more employees
- Mandatory plans (requiring all employees to participate) are often more affordable than optional plans
Mandatory participation is a key feature of the plan. Under mandatory group plans, all employees are automatically enrolled—no one can opt out. This is particularly attractive from an underwriting perspective because it eliminates adverse selection. Under optional plans, employees decide for themselves whether to participate; adverse selection increases, and the terms of the plan become slightly less favorable.
Rights and Obligations of the Parties Involved
As the policyholder, the employer has certain rights and obligations that differ from those of an individual insurance policy. The employer pays the premium directly to the insurer, reports new hires and terminations, and serves as the point of contact for contract changes. The employer does not receive any information regarding individual claims processing or employees’ health data.
As insured individuals, employees are entitled to benefits directly from the insurer. They submit claims via an app, a portal, or on paper directly to the insurer, and the insurer pays the reimbursement directly to them. The employer is not involved in the claims processing—an important data protection consideration.
Termination of the Group Contract and Employee Transfers
A key feature of a group policy becomes apparent when the coverage ends—either because the employer terminates the policy or because an employee leaves the company. In the latter case, employees generally have the right to transfer their group health insurance to an individual policy with the same insurer without undergoing a new medical examination. They then pay the premium themselves but retain the same coverage and benefit from the vesting periods accumulated up to that point.
If the employer terminates the group policy in its entirety—for example, when switching to another insurer—transitional provisions apply that allow the employer to transfer employees to the new insurer without any gap in coverage, often without requiring a medical examination.
Different rate groups within a group contract
Modern group policies allow for the differentiation of multiple rate groups within the same policy. For example, a company can define:
- New employees receive the "Basis" plan with an annual budget of 300 euros
- After three years of service, they automatically move to the "Komfort" plan, which offers 600 euros
- Executives receive the Premium plan, worth 900 euros, starting from the beginning of the contract
Such tiered structures require a clear compensation framework and automated administrative logic to manage transitions between pay grades. However, they are a powerful tool for employee engagement and retention, as employees receive significant pay increases upon reaching certain tenure milestones.
FAKTOR MENSCH : Differentiated pay grades are appealing in theory, but in practice they create an administrative burden that many employers underestimate. Our experience: The additional operational effort required for automated pay grade changes is only worthwhile for companies with 100 or more employees. For smaller companies, we recommend starting with a single pay grade and instead focusing on improving communication—it’s better to have a lean structure with high utilization than a complex one with unclear status. Differentiation should always follow the operational setup, not the other way around.
Framework agreement number as an operational anchor
Each group policy is assigned a master policy number—a unique identifier used for all enrollment applications, claims processing, and communication with the insurer. Employees need this number for the digital onboarding process, when contacting the insurer’s customer service hotline, and, in some cases, for submitting claims. Employers should therefore make the master policy number easily accessible, for example in an onboarding document or on the employee portal.
Conclusion
The group policy is not merely an administrative arrangement, but the foundation upon which the entire economic and communicative appeal of the supplementary health insurance plan is based. It eliminates the need for medical underwriting, offers more favorable premium rates, enables standardized administration, and ensures a seamless transition to individual policies when an employee changes employers. For employers, this means that choosing the group contract is the first and most important decision regarding coverage—even before selecting individual benefit modules.