Group Health Insurance vs. Individual Health Insurance
When comparing GROUP Health Insurance vs. INDIVIDUAL Health Insurance, one needs to be aware of many differences. Some of these differences include the following:
Group Health Plans (IL 2-50 employees)
Some Advantages include
- Applications for group health insurance cannot be rejected due to medical problems or histories, however premiums can be surcharged due to medical histories or other underwriting factors (in IL the maximum surcharge is 67%).
- Newly hired employees, enrolling when "eligible" cannot be turned down due to their medical histories, or the medical histories of their dependents.
- Maternity cannot be considered a pre-existing condition
- Enrollees get credit for prior creditable coverage, which can reduce any applicable waiting period for pre-existing conditions.
Some Disadvantages include
- If a group insures people with medical histories, rates for the entire group may be raised.
- When considering a change in carriers, having employees, dependents, or people on continuation of coverage (with medical problems), may limit the choices available to the employer, (due to the possibility of having significant surcharges applied to the rates for these medical histories).
- When an employee terminates employment or no longer works enough hours to be considered "eligible" for coverage, they do have options for continuation of coverage (see information on Continuation in our website), but keeping their coverage long-term may be more difficult or more expensive than an individual policy would have been.
- Some insurance carriers require selection of one set of benefits for all employees. Other carriers allow offering more than one plan design, and then each employee can select from one of the available plans. It is possible that some enrollees may not be satisfied with the plans offered by the employer.
- Group Insurance plans generally require some employer sponsorship of premiums. An employer does not need to pay the full cost of the plans, but does need to help in some way (each insurance company has it's own rules as to the minimum sponsorship requirements).
- Group Insurance plans also require a minimum participation of your "eligible" employees. Once eligibility is defined, insurance companies generally require 50-75% participation, depending on whether the employees waiving coverage have other insurance (such as a spouse's group insurance or Medicare) or not.
Individual Health Plans (IL)
Some Advantages include
- If an employer is not willing to sponsor any portion of the insurance premiums, or just wants to sponsor the cost for specific employees, individual insurance plans may be worthwhile considering.
- No minimum participation is required. Whoever wants to apply for coverage can do so, without having to insure a certain minimum percentage of the group.
- Each person can select whatever benefits & premiums they are comfortable with: with or without maternity, high or low deductibles, comprehensive coverage or in-hospital only.
- Individual insurance is not tied to employment. If an employee leaves the company and has an individual health plan, they can take it with them, and keep it for as long as they like.
- Individual health plan renewal premiums are generally not based on the health of the individual insured. Premiums are usually based on the overall experience of the "pool of business" for the insurance company, for that particular type of policy.
Some Disadvantages include
- Individual health insurance plans are medically underwritten, and coverage can be rejected due to medical histories or conditions. Another possibility is that an insurance company could accept the application, but exclude coverage on a specifically named medical condition/s.
- When multiple people apply for individual insurance policies, it is possible that some applicants are approved for coverage, while others are rejected for coverage (or various medical condition/s could be excluded from coverage).
- Many insurance companies have a waiting period for pre-existing conditions, even if the applicant has had prior insurance coverage.
- Not every insurance company offers maternity coverage with individual insurance plans, and most that do offer this coverage have a waiting period before a maternity/delivery will be covered under the plan.
These are just a few of the many advantages & disadvantages of both group & individual health insurance plans. Please be sure to read the brochures & policy certificates from any insurance coverages you are considering, and understand any provisions & limitations. Please feel free to contact us to discuss your situation, and we shall make every effort to assist you in selecting the most appropriate plan for your situation.