If you receive health insurance from your employer, then you probably don’t give health insurance much thought, because your employer took care of it for you by way of a group health plan. On the other hand, if you are unemployed, self-employed, or your employer does not offer health insurance, then you may have purchased an individual health plan on your own. Do you know what make these two types of health insurance plans different?
Let’s define the terms first
Individual Health Insurance is purchased by a single person for oneself or a family. This type of coverage is not only for individuals, but can also cover the individual’s family. This is a common misconception based on the name of this coverage.
Group Health Insurance is designed specifically for organizations to purchase for their employees. This plan can be established in two ways: a fully insured plan purchased from
an insurance company or a self-insured plan administered by the employer or a third party.
What are the differences?
- Cost – The cost will vary depending on many factors, but typically group health insurance plans cost less for participants than individual plans that offer the same benefits. This is because employers typically pay part of the cost of the premiums. If the cost of premiums is borne by the employer, then they are fully deductible, while any benefit received by group members is tax free.
- Benefits – Every eligible employee of the group that applies for a group health plan is accepted onto the plan, regardless of pre-existing conditions. Self-funded group plans are also exempt from many of the requirements of the Affordable Care Act, so benefits may vary considerably on those types of plans.
- How you buy - Group plans are available through your employer. Individual plans are available from a licensed agent, insurance company, or through the health insurance Marketplace.
- Tax credit – Small businesses may be eligible for a health care tax credit based on the amount of employees they have and the employee’s income. Individual health insurance tax credits are based on the individual’s household income. If the individual’s income falls between 100% and 400% of the federal poverty level they may be eligible for a tax credit.
Health Insurance can be confusing and the terminology is a whole other ball game, so visit the WPS Learning Center for information that is specific to you and your health insurance needs.
The above information is valid for people age 64 and younger. Adults 65 and older, please visit the Medicare website for information on benefits, cost, drug plans, and more. Another valuable resource written in simplistic terms for easy understanding is the Medicaid, CHIP, and Medicare section of healthcare.gov.
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