Group health insurance works by pooling a collective body of people—typically the employees of a business or members of an organization—under a single master insurance contract. Because the insurance pool spreads medical risk across a large, diverse population, insurance companies can offer coverage without requiring individual medical underwriting or health exams for applicants. Employers typically negotiate plan tiers, cover a substantial share of the monthly premium costs, and deduct the remaining employee share automatically through payroll pre-tax systems.
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