Group Health Insurance

If I am an Individual, Why do I have Group Health Insurance?

Many people become confused when it comes to health insurance terms. There are a lot of words used in the health insurance world that are unclear, based on their literal meaning. For example, many individuals are part of a group health insurance plan. Yet, these are often individual policies, which are part of a group health insurance plan. What does this mean?

A group health insurance plan is a policy that is offered to a group of people from one particular organization. This could be a business or fraternity, or other type of organization. Every qualified member of that organization has access to a group health insurance plan. A business is the most common type of group health insurance plan provider. A business owner signs up with a health insurance carrier to offer a group health insurance plan to all of its employees. The employees then, individually, enroll in the group health insurance plan. They will each have their own individual policy, but it will be as a member of the group health insurance plan.

An individual policy, however, does not have to be for just one individual. It can also include that one individual's family members or dependents. To make matters more confusing, one can purchase an individual policy directly through a health insurance carrier, or as part of a group health insurance plan.

Here is the difference. A health insurance provider cannot deny coverage to a qualified member of a group health insurance plan. Therefore, even if you are diabetic, overweight, and a smoker, which are considered the biggest health risks out there, your group health insurance plan administrator must allow you to enroll in the group health insurance plan that your employer offers. This would not be the case if you go to purchase your own individual health insurance plan through a private insurance carrier. In that instance, the health insurance provider is allowed to deny you approval and not allow you to purchase an individual policy.

There are also differences in regards to monthly premiums. Because group health insurance plans offered through employers or organizations are not allowed to take into account health conditions or high risk factors, their premiums are higher than those of individual health insurance plans. If you purchase an individual policy, your premium will be lower, when compared to the same policy offered as part of a group health insurance plan. However, if you do have high risk factors, you could be denied individual health insurance benefits, or you could be charged extra high premiums. Then, the premium costs of the individual health insurance policy and the group health insurance policy might be similar. You will really need to compare and research your health insurance options at that time, to get a better sense of the pricing.

So, obviously, if you have a pre-existing condition, or other high risk health factors, receiving benefits through a group health insurance plan may be the best option. You cannot be denied coverage, and you cannot be charged extra surcharges or premiums, like you could if you purchased an individual health insurance policy. You also can still add on family members to your group health insurance policy.