There is a difference when considering individual health insurance vs. group health insurance, and if you want to choose the right one for you, it’s important to understand the value of both. While one is not necessarily “better” than the other, there are definite differences. These can help you decide whether to choose one option over the other, so you can get the health insurance coverage that is right for your needs.
In this article we’ll cover how group health plans work compared to individual plans and give you information you can use to decide which insurance would work best for you.
Group health insurance
Group health insurance, also known as employer-based health insurance, gives you the coverage you need as a member of a group. These plans are often provided only to full-time workers, and you might not be eligible for coverage until you’ve worked for a certain length of time.
That isn’t always the case, however, as every employer does things differently. Some workplaces don’t have waiting periods, and some may also let part-time employees buy into these insurance plans. There are also certain employer health insurance requirements that your employer will have to meet in order to offer group health insurance.
But because the insurance company spreads the risk across a large number of policyholders with group health insurance, they typically reduce the premium for individual members. That’s one of the major advantages of group insurance.
Many employer sponsored health insurance plans offer:
- Thorough and comprehensive coverage
- A number of doctors to choose from
- The chance to add dental and vision coverage, if it’s not included in the basic plan
- Discounts for family members
- Choices that individual coverage may lack
- Pre-existing condition coverage
Individual health insurance
Individuals who don’t have access to group health insurance through their employer or those who are unemployed often choose individual health coverage to meet their medical needs. You can purchase an individual health insurance plan on your own. You can buy the policy directly from the insurance company or on a relevant health insurance exchange.
Employer sponsored health insurance vs. individual health insurance
Employers choose which insurance company to go with for employer-sponsored health insurance. Someone from the benefits team usually researches the best rates and coverage for the company as a whole. Most employers share the cost of the premiums as part of the employee benefits package. Typically, your company takes out money from your paycheck each month to cover your part of the health insurance premium.
Benefits of employer sponsored health insurance plans include a discount based on your employer’s contribution to the premium. Another benefit is that you save time and money researching health insurance on your own. Typically, you can include your dependents, including your spouse, in your plan for an additional cost. If your employer deducts the premium from your paycheck, you also don’t have to pay income tax on it.
Individual health insurance puts the onus on you to do the research and to choose a company with the right plan for your needs. Although this gives you more control over your family’s health insurance, it also costs more money since your employer is not subsidizing the premiums.
You can purchase individual health insurance from a marketplace operated by the federal government. Your premiums depend on your income and size of your household, which determine whether you are eligible for subsidies. If you don’t have access to group health insurance, the marketplace plans might be a great place to find the coverage you need at affordable rates.
You can also look for private health insurance plans, which give you the power to choose your own insurance company. You may also get a subsidy from the government based on your age, income, and other factors. Before making a final decision, it’s important to understand individual and family health insurance from the perspectives of group and individual health plans.
Choosing group health insurance can save you money
One major reason to consider individual health insurance vs. group health insurance is to discover which one is going to be more affordable. With group health insurance, you’ll generally see that there are cost-saving benefits such as:
- A larger risk pool for the plan
- An employer contribution toward your premium (often 50%)
- Employer-based tax incentives
When there are larger risk pools, the price comes down because more people are in the pool (group). That means there are usually a lot of healthy people who can offset the cost of the medical care for the people who aren’t as healthy. Also, having your employer pay half of your health-care premium can make things a lot more affordable to you.
Your employer might get a tax break for helping insure you and other employees. But that still doesn’t mean that you wouldn’t be better off with individual health insurance in some cases.
Group health insurance usually comes from an employer
In most cases, group health insurance plans are handled by an employer, union, or other organization. These plans are often provided only to full-time workers, and there you might not be eligible for coverage until you’ve worked a certain length of time. That isn’t always the case, though, and your employer may do things differently. Some workplaces don’t have waiting periods, and some may also let part-time employees buy into these insurance plans.
Many group health insurance plans offer:
- Thorough and comprehensive coverage
- A number of doctors to choose from
- The chance to add dental and vision coverage, if it’s not included in the basic plan
- Discounts for family members
- Choices that individual coverage may lack
- Pre-existing condition coverage
Because of these options and selections, many people feel group health insurance is the right choice for them. It might not be best for everyone, but if group health insurance is offered to you, there are plenty of good reasons why you may want to buy it instead of finding your own, individual insurance plan.
Other ways to qualify for this health care option
If you don’t have an employer to provide group health insurance for you (you’re self-employed, for example, or your employer doesn’t offer it), there may still be other ways you can have a choice of individual health insurance vs. group health insurance. These ways can include:
- Being part of a group or organization
- Being an employer yourself, with at least one employee
- Searching for state-specific options that might apply to your situation
You might still be able to get group insurance. Some people who are part of a group, such as a freelancer’s union or an actor’s guild, may have more choices for group health insurance even though they don’t have an employer offering it to them. It’s worth looking into, in case there are options you’re not aware of that could really benefit you.
Minimum essential coverage may be a requirement
If you’ve thoroughly checked out the individual health insurance vs group health insurance information and determined that you need to get individual coverage, that can also work well. Depending on your income and other information, you may qualify for tax subsidies and other perks that can help you get affordable insurance on your own.
If you can’t get group insurance, check your state department of insurance to see what your options are.
You might want to consider short-term health insurance that may protect you if you get sick or have an accident. Enter your zip code on this page to start comparing plans.
Individual health insurance vs. employer health insurance FAQs
Is it better to get health insurance through work?
Getting health insurance through work can be a cheaper option, which is a major advantage of most people. However, if you want more control over your medical coverage, you might opt for an individual health insurance plan. If you are self-employed or your employer does not offer group health insurance, you may have to choose an individual health plan to cover your medical needs.
What are the disadvantages of employer based health insurance?
Cost is a major disadvantage of employer based health insurance. Every year, insurance companies bump up the price of group coverage. Businesses and employees both end up paying higher premiums and plan participants often accept higher deductibles to minimize their premiums. Additionally, most group insurance doesn’t give you much flexibility. Many employees wish that they had another choice and some choose individual plans that best meet their needs.
Is individual or group insurance better?
When deciding between individual health insurance vs. employer health insurance, you first have to determine what you’re looking for in your insurance. There are benefits to both group and individual plans. However, some people don’t have access to group insurance plans or cannot afford the premiums.
Find health insurance that works for you with eHealth
You should now have a better understanding of how group and individual health plans work and the difference in price and eligibility. Next, it’s important to know where to go to explore your options for both individual and group health plans.
eHealth offers numerous plans for individuals and families and group plans for small business owners. Contact us to find out your options and to ask any questions that you may have about the different plan types and coverage in your area. Our customer service representatives are always here to answer your questions and assist you with your plan choice. You can also check out individual and family health plans or group health plans available in your area with eHealth.
