For salaried individuals, when it comes to considering health insurance, there are broadly two options available – group health insurance and individual health insurance. Though both the plans offer healthcare coverage to an individual or the family, both the plans differ by definition, details and in other ways. Understanding the difference between group health insurance and individual health insurance can help plan for better meeting one’s healthcare needs.
The following is the difference between group health insurance and individual health insurance:
- Definition: Group health insurance plan is a type of healthcare coverage offered by the employer to all eligible employees of the company. The coverage can also be extended to the dependent family members of the employees. On the other hand, individual health insurance plans are purchased by an individual directly from the insurance company. In such plans also, coverage can be purchased for self and family.
- Protection: The protection or the coverage offered by group health insurance plans are limited and are only applicable to the period of employment. On the other hand, individual health insurance plans offer comprehensive protection with lifelong renewable options.
- Plan choice: In the case of group medical insurance, the choice of plan is made by the employer for all the employees. That means individuals who are getting the health insurance coverage (i.e. the insured) will have no control on coverage as a standard plan is chosen by the employer for all the eligible employees. On the other hand, individual health insurance plans allow the insured to select the plan based on the individual requirement. With a wide variety of individual health insurance plans available, individuals seeking healthcare coverage can customise the coverage purely based on need.
- Cost: Group health insurance plans feature coverage purchased in bulk on risk pooling basis for a large number of employees in the group. Hence, group health insurance plans are offered at a relatively lower cost. On the other hand, individual health insurance plans are designed on a need-specific basis and the cost is usually higher than group plans, depending on the coverage and benefits chosen.
- Pre-existing Ailments Cover: In the case of group insurance plans, employees can conveniently get the basic coverage irrespective of the health history with an immediate inclusion of pre-existing illnesses. And all this is offered at a lower cost along with the convenience of making payment through payroll deduction. On the other hand, it can sometimes get difficult to get the desired individual coverage at an affordable rate for many reasons such as medical history. Most policies cover pre-existing illnesses after the waiting period only.
- Additional perks: Apart from premium discount, group medical insurance plans do not offer any benefits even if you do not make any claim for years. On the other hand, individual health insurance plans come with various perks like no claim bonus, wellness benefits and numerous optional riders to enhance the coverage.
Both group health insurance plans and individual health insurance plans differ in various ways. There are benefits and limitations in both these plans.