The difference between group health insurance plans and individual health insurance policies begin with access to coverage. Those who buy individual policies can expect to find that they often offer less coverage and higher costs than group plans. Additionally, insurance companies are increasingly unwilling to cover individuals having existing medical conditions.
Access
An important difference between group and individual health insurance is the limited access to group health insurance plans. This is generally restricted to employees of organizations that offer group health insurance, with coverage often extended to spouses and dependent children. However, these organizations may limit coverage access to full-time workers and/or employees who have been with the organization for a defined period. Those who cannot access group health insurance through an employer often must opt for costlier individual health insurance to have coverage.
Pre-Existing Conditions
Individuals with access to group health insurance who suffer from pre-existing conditions may find it easier to get health coverage than those who do not have such access. The Health Insurance Portability and Accountability Act limits the ability of group plans to deny coverage to people with pre-existing conditions. These same persons, however, may find that insurance companies will not offer them individual health plans, or will charge exorbitant fees for coverage.
Comprehensive Coverage
Group health insurance plans often offer more comprehensive coverage than individual plans. For example, individual health insurance plans may not include pregnancy and childbirth coverage. While employer-sponsored health insurance will often include dental and vision plans, individual health policies rarely offer this additional coverage, although you can purchase it separately.
Out-of-pocket Costs
The out-of-pocket costs for care associated with individual health insurance plans are often much higher than those with group health insurance. These costs include deductibles you must meet before insurance begins to pay for care. They also include co-pays for medical office visits, diagnostic tests, and prescription medications. These costs are usually lower if you are on a group health insurance plan.
Premium Costs
A big difference between group and individual coverage is the cost of premiums. With no employer absorbing a high percentage of the cost, premiums for individual health insurance are often prohibitively high.
In 2010, the Kaiser Family Foundation reported that people who purchased individual health insurance paid average annual premiums of $3,606. The foundation said this is less than the average $4,824 annual premium reported in 2009 for employer-sponsored insurance, which typically provides coverage that is more comprehensive. However, employers usually pay a significant portion of the $4,824, while individuals who purchase health coverage on their own must pay the entire premium themselves.
