Understanding the Differences Between Individual and Group Health Insurance Policies

For smaller businesses looking to compete for high-quality workers, being able to offer good health insurance is one of the key aspects. For many workers, a solid benefits package is more important than any other factor – even their base wages! Offering good health insurance to your workforce can easily lure in a better grade of talent, and help you retain them even when headhunters start sniffing around.

One of the biggest questions smaller organizations usually have when they’re researching benefits packages is whether it’s better to offer group plans or offer reimbursements for individual plans. Here is a quick breakdown of the differences.

Individual Reimbursements vs Group Plans: Which Benefits Option Should You Choose?

These are two wholly different types of insurance, so in many cases, the best option will depend on your situation.

Individual plans are purchased by individuals for themselves and their family. You wouldn’t be buying them yourself, but rather offering reimbursements for workers who get coverage. People often go through insurance agents to sign up, and thanks to the ACA, can get full coverage for any issue – even pre-existing conditions. They also offer workers plenty of options in finding the right coverage for their situation.

Group plans are purchased by an employer on behalf of their workforce and offered to both workers and their family/dependents. The costs are generally split between worker and company, with the idea being that going in as a group will result in lower end costs for workers. The selection of plans are generally limited to “one size fits all” options with less customization than individual plans offer.

The other major issue to consider here is ongoing coverage. When someone purchases individual plans, they can carry those plans with them even if they change jobs. There are limited ways to do this with group plans. COBRA is an option, but a very expensive one that few workers can afford.

So, in short: individual plans and reimbursements will offer your workforce more choice in their insurance coverage, and more long-term guarantees that those plans will stay in place. However, group plans may be less expensive for you, as well as potentially offering you better tax deductions.

Get Help Finding Good Health Insurance for Your Organization

Need more help deciding on benefits to offer? Contact Good & Associates to talk about your options in employer health plans!