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Get the Facts: Group Health Insurance vs. Individual Health Plans

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With the various health insurance options available today, it’s easy to see why people are confused. Basic options include group health, individual health plans and short term coverage. Get the facts about all of your options so you make an educated choice about your health insurance coverage.

group health insuranceWhat is Group Health Insurance?

Companies purchase group health insurance policies for their employees. Much like individual coverage, these plans are purchased by the employer on the open market. Some employers pay for the total cost of group health insurance, but they are only required to pay 50% for the employee only.

It is offered as an added benefit or incentive to employees. Often there will be a waiting period of 1-3 months before the coverage becomes effective. And some businesses require employees pay the total amount for their spouses and dependents in a group plan. Group health insurance can also be offered by professional groups and other organizations as long as they have enough participants to qualify for it.

Businesses will need a minimum of 2 employees to offer coverage and there will be minimum participation requirements depending on the size and scope of the group. Some companies can qualify for lower rates using medically underwritten MEWA plans. Be sure to ask about these innovative plans if you’re under 50 total employees.

What is Individual Health Insurance?

A single person (or family unit) purchases individual health insurance, as opposed to a company, organization, or professional group. It is purchased on the private market or through the federal marketplace. Despite the name, people can purchase this insurance for their families so it covers more than one individual. While one person is purchasing it, all the member of the immediate family can get coverage.

There are few companies offering plans outside of the Federal Exchange, so it’s wise to explore your options with an agent before enrolling. Depending on your income for the current year, some individuals and families will qualify for a tax credit. This can help lower your rates and in some cases your out of pocket exposure as well. In other words, your deductible and coinsurance amounts can decrease based on your projected income for the year.

How Do You Get Coverage in the Meantime?

It may take time to qualify for group health insurance, such as being employed for a certain period at the company. And purchasing individual health insurance may also take time. Plans may not start until the first of the upcoming month.

In the meantime, people can buy short-term health insurance. While the coverage is limited and only available for a brief period, it is better than having no coverage at all. Work with an insurance agent to learn more about short-term health insurance options to see if they are right for you.

In fact, some of our clients are purchasing short term health plans for an entire year now. These plans are growing in popularity because they can be much less expensive than Exchange plans and will cover most catastrophic events. They will not cover preexisting conditions, however – so they aren’t the best fit for everyone.

What Makes These Health Insurance Plans Different?

There are distinct differences between group health insurance and individual health insurance plans. Consider what makes them different:

  • With group health insurance plans, nobody with pre-existing conditions can be denied. And there are no waiting periods to satisfy for any preexisting conditions. By rule, companies must pay for at least 50% of the employees’ premiums only.
  • Individual health plans can cost less than group health insurance – especially for those who qualify for tax credits. You’ll need a Qualify Life Event in order to purchase a plan outside of the yearly Open Enrollment window. Preexisting conditions are also covered with on-exchange plans. You cannot get a tax credit if you’re offered coverage from your employer, however.
  • All group health insurance plans and individual plans include maternity coverage. Short term policies typically will not cover this benefit. It’s wise to ask to make sure.

What About Health Discount Cards?

You’ll also see a lot of advertisements about health discount cards and policies. These programs do not provide actual insurance coverage. Rather, certain services are offered at a discounted rate. And this means people could be left with thousands of dollars in medical bills for an emergency situation.

Discount policies are never a suitable substitute for legitimate health insurance coverage. Sometimes people use them as a supplement to their regular health insurance to offset deductibles and copayments, but you need to be careful with these plans. They can cause more problems than they solve.

Benefits From Selecting Group Health Insurance

Group health insurance is a top choice for most people. There are numerous benefits for people who have this coverage. The biggest difference these days are the networks. Most individual plans will only offer smaller HMO plans, but most group policies are PPOs. If you can get it, you’ll usually benefit from the larger network associated with a PPO. And if an employer pays all or part of the cost of this insurance, it is usually the most affordable and comprehensive option.

Consult with a reputable insurance agent today to learn more about group health insurance, individual health plans, and short-term health insurance. Find out which options are right for you or your business.

Thank you for reading! How can we help you? Contact us today.


Category: Group Health Insurance, Health Insurance