Individual health-insurance plans seem to be more affordable than group health-insurance plans. As we move into the new year, those individual health plans have to cover everyone that applies – regardless of health status – and subsidies are available for those that qualify. Even though all of these benefits exist, a lot of companies do not offer individualized insurance plans. Here is how they work and why individual insurance is more affordable compared to group insurance.
Comparison Between the Two
Individual insurance is what someone would get to cover themselves and their family. These plans can be purchased with the help of an insurance agent to ensure they are getting the best plan and the best rates. However, when the new federal health insurance law takes effect in 2014, these plans have to cover everyone that applies. The risk is spread among many people, which can be a large group depending on the specific plan that the company is offering.
Group insurance is usually purchased by the employer of a company and is then offered to those that are eligible within the company. This includes employees’ families as well. Currently, more than 50 percent of Americans are part of a group health-insurance plan through their employer. The employer is able to select the plan that you get when you sign up with them. The premium costs are usually split with the employer and the specific employee, and the employee must pay a minimum percentage of the rates as well. The premium can be raised every year that the employee stays on the plan. The risk is spread across the company and not on those that have the insurance, depending on the amount of employees on the plan.
The costs associated with both types of insurance looked like this in 2012:
Individual Plans – More than $2,200 annually for one person, more than $4,900 for a family
Group Plans – More than $5,600 annually for one person, more than $15,700 for a family
Since this information comes from 2012, a lot of the prices will probably go up when 2014 hits. Now everyone is going to get the same plans and coverage, and also the same costs, since each plan has to offer coverage to people that might not be healthy. Each plan will go up more in price when it comes to covering everyone that wants to sign up with them. A lot of factors go into whether or not employers will be paying more or less than they are currently, such as the location, their current health plan, the type of coverage, health status and the income of the employees that they are hiring. However, individual health insurance tends to be the wiser choice since it provides more stability, is more affordable and does not present as many risks.