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Group Health Insurance: 5 Reasons To Drop Your Plan
By Brad
Group health plans can be a blessing to many individuals and families. They provide essential coverage and, depending on the employer, cost little or nothing to the employee. However, some blessings can be a burden in disguise. Many individuals and families can actually be much better off by getting an individual health plans. There are countless reasons for this. However, we will dive into the top 5 reasons here:
1. Individual Health Plans Can Be Less Expensive:
Depending on the plan and how much of your money goes into paying for the plan there is a good chance you would pay far less for an individual policy for either the entire family or just your spouse and children. You can look at your pay stubs to see how much you pay each paycheck for your group health plan. Then, simply comparing this to individual/family quotes can be extremely fast and simple. There are countless websites on the Internet that provide free quotes from multiple carriers. So why are group plans more expensive? Here are a couple of reasons among many:
- Group plans accept all employees, which increases the risk for the company and in turn, increases premiums for the entire group. This also makes group plans very risky for individuals in the company. For example, if Karen in the finance department got a life threatening condition, this would affect everyone in the company with dramatically increased premiums and dramatically decreased corporate profits. Maybe, this is already happening now and you don't know it.
- Group plan groups are usually much smaller than the actual "group" participating in individual policies. This is because an individual's group is all the insured individuals for the entire health company group. This can be hundreds of thousands to multiple millions. Most individual providers offer and insure people throughout your entire state. This affects the cost of the plan because the risk for an individual plan is spread against dramatically more people. The more people, the less risk and the lower the premiums.
2. Losing Your Job, And Your Health Insurance
Losing your job can be tough, but the stress of losing your health can be even tougher. There is always the option for COBRA, but COBRA can be extremely expensive as it carries the exact same plan that you had with the group. To make things even scarier, if you or one of your family members were to get sick before losing your job it would be very difficult and
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expensive to get due to pre-existing conditions. However, individual policies are not affected in anyway by your employment. So, if you were to lose your job, you can simply stay with your individual plan indefinitely regardless of work. If you and your family are healthy, this is the best time to get an individual policy. The plans will still be inexpensive and you will not have to worry about losing coverage due to job loss, or not getting coverage due to pre-existing conditions. And, if you or a family member develops a condition the premiums cannot be raised or coverage dropped. Group plans do not offer that protection. Employers are free to cut benefits, raise contribution amounts, or drop coverage entirely.
3. Shopping Around
Shopping around to get the best deal is a no-brainer, right? Well, group health plans are often limited to one provider, or possibly two if your company is large enough. With individual plans, you can pick from any provider (often 10 or more) in your state. This means you can pick from scores to hundreds of competing plans, and find the one that fits best for you and/or your family, allowing you to actually shop around. With an individual policy, if you don't like the chosen provider you can switch at any time.
4. Plan Flexibility
Group health plans not only limit you to the number of provider options; they also limit the number of plan options. This includes anything from riders like dental, vision, chiropractic, co-payment options, HSA plans, deductible amount, and total out of pocket costs. Plan options are the way you customize a plan to fit your needs. Group plans are almost always set with no flexibility.
5. HSA HSA HSA
HSAs, or Health Savings Accounts, are the next best thing in the world of health insurance. HSA plans allow contributors to enroll in high deductible, but very inexpensive individual/family plans. These plans also provide tax-deductible savings accounts to help pay for deductibles and other eligible health expenses such as dental, vision, and over-the-counter medication. The contributions accrue and grow tax-free and can be used tax-free for any eligible medical expenses or withdrawn penalty-free after age 65 for any purpose. These plans are excellent options for individuals and families healthy or not and a great way to save money for retirement by saving now on premiums.
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