What is the major difference between group and individual insurance?
UPDATED: Aug 23, 2010
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Asked August 23, 2010
Group insurance plans are provided as part of an employment package, or purchased through the power of an organization such as the AARP. Group plans are not allowed to deny coverage to persons with certain preexisting conditions, and are not allowed to single those persons out for increased insurance rates. The result is that group insurance plans are available where it may not be possible to qualify for an additional plan within a regulated pricing structure. One disadvantage of group insurance is that you may only be provided with windows of opportunity to sign up for the coverage, and failure to enlist during that period means you must wait until the next enrollment period comes around.
Individual insurance is commonly used by unemployed persons or those who are self employed and do not have access to group insurance plans. Individual insurance plans can specifically exclude preexisting conditions and require a thorough health examination before you are accepted. Because the costs are not moderated by large groups of people with varying health levels, individual insurance plans tend to be more expensive and restrictive than group plans.
There are some special types of health insurance that may be more beneficial to individuals. For example, indemnity plans require you to pay a set deductible per visit, and pay a percentage or set maximum amount on the procedure. Another option is a managed health care savings account. You make regular deposits into an interest-bearing account that health costs can be deducted from, providing a sort of self-insurance against possible needs. It should be noted also that a managed savings account can be used in conjunction with other health care plans, both group and individual, reducing the cost of your insurance rates.
Answered August 23, 2010 by Anonymous