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Group vs. Individual Health Insurance Know Your Options and the Difference in Coverage


O


pen enrollment is right around the corner and with that comes the


task of reviewing new health insurance options for the 2024 plan year. Whether you’re an employer or an employee, we all need health insurance — and knowing the difference in ben- efits can be very confusing.


With both group and individual plans, there are vast differences in networks, benefit options, premiums and carriers available. Age, to- bacco use and location play a big role in all medical premiums, and depending on your location and the type of plan you choose, you may only have one carrier option available in your county.


Let’s break down the difference between group and individual plans.


GROUP PLANS


• Group health insurance benefits are a great way to maintain and attract new employees.


• Group plans typically have richer networks and benefits than individual plans.


• Group plans are selected and offered by the employer who is in control of the benefits offered.


• Plan type options are Affordable Care Act (ACA) plans and self-funded/level- funded plans.


• Deductible options can range from $0 to $9,450.


• Small group ACA plans are generally age-banded whereas self-funded plans generally use composite rating (average age within the group).


GROUP ELIGIBILITY


Depending on the carrier, the group eligibility requirements will vary. With many carriers, the employer would be re- sponsible for 50 percent of the employee only premium, which means significant savings to an employee. The employer is not responsible for dependent premium. Eligible employees must average 30 hours or more per week to qualify for the plan. Each eligible employee must be offered the plan but may waive


• PPO networks with group plans are broad and include out-of-network coverage. However, smaller and more limited EPO (Exclusive Provider Or- ganization) and POS (Point of Service) networks also are available, which can save a significant amount of premium.


• Several plans and networks can be of- fered within one group policy (depend- ing on group size), such as a base plan, a buy-up plan and a buy-down plan. Em- ployees can pick a plan to fit their needs if the employer allows.


• Reference-based pricing also is available with some self-funded plans. This pric- ing does not use networks but instead pays a percentage of Medicare allowed amounts.


• Group plans can be formed anytime throughout the year and are not bound by open enrollment.


• Eligible employees have specific enroll- ment periods to join the plan, such as new hire eligibility, loss of other cover- age as a qualified event, and open enroll- ment during the policy renewal.


coverage if they have other qualifying cover- age in place they wish to keep.


Employees may opt for a subsidized individ- ual marketplace plan if their employer plan premium is deemed unaffordable to the em- ployee. If the employee’s share of employee only premium is greater than 8.39 percent of income for the 2024 plan year, the employer plan is considered unaffordable, and the em- ployee can then apply for a subsidy through the marketplace.


Employers not interested in offering group coverage can elect an HRA (Health Reim- bursement Arrangement) to help employees with individual plan premiums or out-of- pocket expenses. HRA plans have caps on the allowance an employer can offer.


INDIVIDUAL PLANS


ACA plans are the only option for purchasing individual major medical plans.


• Individual plans are purchased either on or off exchange (Marketplace), depend- ing on subsidy eligibility. Subsidies and cost sharing reduction further reduce premiums and out-of-pocket expenses for the insured. Only Silver plans in- clude cost-sharing reduction.


12 focus | FALL 2023 | ISSUE 3


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