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Comparison of Individual Health Insurance vs. Group Health Insurance

Written by: Christina Merhar
September 9, 2020 at 8:05 AM

When small businesses consider health insurance options, it's common to compare a traditional group health insurance plan with individual health insurance reimbursement.

How do individual and group health insurance compare? Here's a concise overview.

Individual health insurance and group health insurance defined

First, let’s define the two types of insurance plans:

  • Individual health insurance, sometimes called employee-sponsored coverage or self-insured coverage, is a health insurance policy an individual purchases for themselves and/or their family. Individual health insurance policies are often purchased with the guidance of an insurance agent or broker to help navigate plan choices and premium costs. Insurance companies cannot deny coverage for preexisting medical conditions, and premium tax credits are available to those who qualify, based on income.
  • Group health insurance, sometimes called employer-sponsored coverage or group coverage, is a type of health insurance policy purchased by an employer and offered to the employer’s eligible employees and their eligible dependents. In 2019, more than half of non-elderly Americans have group health insurance coverage through their employer or the employer of a family member. With group health insurance, the employer selects the plan, or plans, to offer to employees. The premium cost is often split between the employer and employee, and there is a minimum percentage rate the employer must contribute.

How group and individual insurance compare

Here are the primary characteristics of individual health insurance compared to group health insurance and how they work for the employee and employer.

  Group health insurance Individual/family health insurance
Coverage continues when job is lost Limited Yes
Coverage continues when jobs change Limited Yes
Choice of medical providers Limited Yes 
(you can choose any carrier)
Coverage of preexisting conditions Yes Yes
Who purchases the plan Employer Employee
Tax-deductible premiums Yes Yes, if a health reimbursement arrangement is set up by the employer.

How group and individual insurance costs compare

In 2019, the average national annual premium costs for health insurance with a group health insurance plan and with individual health insurance were as follows.

  Single coverage
Group health insurance plan, 2019 $7,188/year
Individual health insurance plan 2019 $5,472/year

Source: KFF for employer-sponsored, eHealth for employee-sponsored

It’s important to note that the costs for individual health insurance plans are trending downward in many states, while the cost trends for group health insurance plans continue to increase. Employers also save time and money when employees purchase and manage their own plans.

Learn why individual health insurance is more affordable than group health insurance

What questions do you have about individual health insurance vs. group health insurance? Let us know in the comments below.

Topics: Individual Health Insurance, Group Health Insurance, Health Insurance

Additional Resources

Ready to cancel group health insurance in place of an HRA? Get our toolkit.
Group health insurance or HRAs? Compare them with our chart.