According to the Health Insurance Resource Center, 57 percent of Americans have group health insurance through their employer, and 29 percent get it from a government or military plan. The National Association of Health Underwriters (NAHU) reports than 5 percent buy their own individual insurance. Group insurance offers lower premiums and guaranteed issue, and other differences exist as well.
Qualifying
Employers and associations typically set the criteria for eligibility, which may include a waiting period such as 90 days, and either working a minimum number of hours per week or qualifying for association membership. Insurance companies providing individual insurance determine whether to accept an applicant based largely on the applicant's health history, claim history and assessed risk.
Enrolling
An employee enrolls either upon becoming eligible or during the annual open enrollment period, selecting coverage that applies until the next enrollment period. Individuals seeking insurance on their own can apply for coverage at any time and must follow the insurance company's application process. The applicant selects a start date for the policy, but usually has to go through an underwriting process which can take several weeks.
Impact of Health History
With group insurance, your health history does not impact your chances of obtaining coverage or your premium. Rates are determined for the group overall and may vary only based on factors such as age and gender. An employer or insurer cannot deny an individual employee coverage or charge a higher premium due to health history. An insurance company may deny an individual applicant coverage, charge a higher premium, or exclude coverage for certain conditions.
Premiums
The risk is spread across a much larger group of people in large companies; therefore, premiums for insurance in large employer groups are generally lower than those for small companies, which are in turn lower than those for individuals. Some employers cover 100 percent of the insurance cost, but more often, employees pay a portion as well. Employers often establish automatic paycheck deductions for employees who elect insurance benefits. Individuals obtaining insurance from an association or on their own usually pay the insurance company or a broker.
Benefits
Both group and individual health insurance policies can offer HMO and PPO options, which specify the deductible, the level of coinsurance, the maximum out-of-pocket cost, and any lifetime limits. Policies may exclude certain types of conditions, treatment or equipment. Group policies usually include coverage for a greater range of conditions and treatments. The NAHU points out that policies for individuals often do not include benefits such as maternity coverage or substance-abuse treatment. Insurance companies provide such coverage at an increased premium as an optional rider.
Continuation
The Health Insurance Portability and Accountability Act (HIPAA) guarantees that under certain conditions, individuals who must replace their existing insurance can get coverage and are not subject to pre-existing condition limitations. A key criterion for eligibility is an existing insurance policy that has been in effect for a minimum amount of time, and group plans are more likely to qualify as existing coverage under HIPAA.
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