Group vs Individual Healthcare
Group and Individual Healthcare Insurance
The Difference Between Group and Individual Healthcare Insurance
Insurance is an unwelcome expense and for most people, the process involves getting
the best cover for the lowest premium possible. One of the most frequently asked
questions is about the key differences between individual and group healthcare insurance
and which one is better.
Individual healthcare insurance provides cover for just one individual and the rates
are based on the person`s own medical history, plus other relevant factors such
as height, weight, smoking status and family history. However, in group insurance
the premium is calculated based upon the entire group`s collective risk.
Whilst on paper this can mean that group healthcare insurance works out cheaper,
this is very frequently not the case, especially if the individual`s health is good.
In group insurance, the premium rates are based around the medical history and other
risk factors for all of those insured. If you are very fit and healthy but are obtaining
insurance with others who are not in prime health, the group premium will be pushed
higher by factors which you have no control over. This can seem very unfair if you
work hard to keep yourself in tip top condition - essentially you will be paying
for other people`s bad habits.
If on the other hand you have substantial health issues yourself, spreading the
risk via group insurance can help to lower the cost but there are sacrifices to
take into account.
A group policy can be inflexible and tailored to the employer`s needs rather than
the individual. This can mean the premium is higher than necessary for your own
needs or conversely, the policy fails to cover you for everything you want, just
what your employer deems necessary. It is also not usually possible to add specific
benefits onto the plan on a `pick and choose` basis - you tend to get what the owner
of the group plan has specified is included with no variations.
Individual policies do not have the same problem as being based purely around yourself,
you can pick and choose the riders and additions on to your policy as you see fit,
providing the insurer agrees. The other benefit is that if you start to struggle
financially you can cut back on your policy or maybe raise your deductible, options
which are not possible on a group plan.
Premiums for individual plans can sometimes seem more expensive but it is possible
to reduce the premium by adjusting the policy to meet your own needs. The other
factor to bear in mind is that the premium can be written off as a deductible for
tax purposes, so is actually cheaper than it first appears.
Another fundamental difference is that individual policies are governed by state
regulations and will vary in each state across the US. Group policies must adhere
to federal laws and as such are far more uniform.
A recent study concluded that on average, individual policies were actually cheaper
but employers paying part of the costs for a group policy gave them a reputation
for being cheaper. If you opt to pay for your premium in a lump sum, ensure you
carry out a
credit card comparison before you do so to ensure that you are not paying
additional interest on top of your insurance premium.
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