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What is the difference between group and individual health insurance?

Individual and group health insurance policies differ in terms of cost, coverage, and portability. In 45 states, individual policies are subject to medical underwriting, which makes them much less expensive than group policies for healthy individuals. Individuals with adverse health conditions may not be able to obtain individual coverage, but may have access to guaranteed-issue individual coverage. Group policies are more expensive but guarantee the same coverage to every participant.

Employer group policies may only be held by a company's employees. In contrast, individual coverage is not conditioned on employment, so employees keep their insurance policies when they change employers.

In most states, individuals who cannot secure individual coverage can obtain guaranteed coverage from a state risk pool at a cost somewhat higher than a group policy or from a spouse’s group plan. Under HIPAA, employees who have at least 18 months of creditable coverage under an employer group health plan, have exhausted available COBRA coverage, and who are not eligible for another group plan must be accepted by an insurance carrier without medical underwriting.

For more information, see What is a Personal Insurance policy?

This document has been prepared solely for the purpose of providing information based on legal and tax advice provided to Zane Benefits, Inc. However, it is not meant to provide legal or tax advice for entities other than Zane Benefits. No representation is made as to the completeness or accuracy of the information herein. As such, it should not be used as a substitute for consultation with professional employment law specialists, tax accountants, attorneys, or other advisors. To comply with U.S. Treasury Regulations, we inform you that, unless expressly stated otherwise, any tax information contained in this communication is not intended to be used and cannot be used by any taxpayer to avoid penalties under the Internal Revenue Code.