Individual Vs Group Health Insurance Explained

Individual Vs. Group Health Insurance Explained

The rising medical and treatment costs are making people take health insurance policies seriously. These plans have long been helping people get access to quality healthcare facilities by acting as a safety net against emergency medical expenses. But with so many health insurance plans available in the market, how do you settle with the one that is best for you? The answer is by picking a plan that covers your existing and future medical needs.

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At present, the market is quite abuzz with two types of health insurance plans, viz., the group health insurance plan and the individual health insurance plan. You can pick either one only after developing a clear understanding of both and learning the differences between the two. To make your work fairly easier, we’ve listed down all the differences between the two policies to help you pick the best health insurance plan for yourself. So keep reading!     

What is Individual Health Insurance?

If you take your health very seriously and want to protect yourself from the inflationary medical costs, investing in a good individual health insurance plan can go a long way in helping you with your treatment and other medical expenses. An individual health insurance plan refers to a health insurance plan that offers medical coverage to only one person against a recurring premium payment. This insurance plan can be customized to meet an individual’s specific medical requirement and covers expenses arising from pre and post-hospitalization, ambulance expenses, ICU charges, etc.   

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What is Group Health Insurance?

A group health insurance policy refers to an insurance plan taken for a group of people who are a part of the same organization or group. It is a reasonably standard insurance plan in the corporate world. Many companies pay for their employees’ insurance to retain the best talent. While a group health insurance plan offers medical coverage to employees’ or other insured without them having to pay for it, there are certain disadvantages to this policy.    

Key Differences Between the Two

Now that you know what an individual and group health insurance plan is, let’s look at their differences.

Ease of Customization

If you have an individual health insurance plan, you can customize it the way you want. But since most employees’ don’t have to pay the premiums from their pocket, they don’t get the option to customize health insurance policy according to their needs. Only the employer paying the premium holds the right to add or remove any benefits from the policy.

Premium Value

Individual health plans offer comprehensive medical coverage at a competitive premium price. If you want a policy with the best coverage, you will have to shell out a decent amount of money. But it is not the case with group health insurance. In group health insurance, the employer pays for the insurance premiums, and employees enjoy the coverage at little to no cost.   

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Tax Saving Benefit

Those who use insurance as a tax-saving tool will not like group health insurance. Since the employer pays the premium, the employee cannot claim the premium amount as a deduction while filing ITR. But if you have an individual health insurance plan, you can claim the premium amount you’re paying as a deduction.

Validity of the Insurance Plan

An individual health insurance plan will remain valid if you pay the premium on time. But the group health insurance will stay valid only till you’re an active employee of the company paying the group insurance premiums. So if you don’t own a separate individual health insurance plan and decide to leave your existing organization, you will be left with no medical coverage under any health insurance plan.

Paperwork & Claim Settlement Process

A downside of an individual health insurance policy is the involved paperwork and follow-up with the insurer’s representative for claim settlement. You will have to ensure all the insurance papers are well-documented and safely placed. You will also have to keep following up with the insurance company on your own to file a claim.

Luckily, it is not the case with group health insurance. Since the employer takes the insurance for employees’, all the primary communication takes place between the company’s HR and the insurer. The employees’ covered under the group health insurance policy have to contact HR for any claim settlement-related query, and they take care of the rest. 

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Control Over the Policy

As a person covered under group health insurance, you don’t get to exercise much control over the policy. All the authority to make changes or customizations to the policy remains with the employer. But the case is entirely opposite in an individual health insurance plan. So if you’re someone who wants a personalized health insurance plan, an individual health plan will be better than a group insurance plan.

Use as a Financial Planning Tool

Many people use insurance policies as a financial tool. If you’re one of them, look for a policy that you can customize according to your needs. It can also easily be used to meet your personal financial goals. Since the validity of a group health insurance plan remains active until you’re working for the particular company, relying on it to achieve personal financial goals will be a lot dicey.

No one knows you have to leave a job, so it is best to have a separate individual health plan whose validity doesn’t depend on your employment status.

Group Health Insurance Vs. Individual Health Insurance: Which One is the Best?

If you have gone through all the points above, you would have noticed that both group health and individual insurance plans have certain pros and cons. Not every policy is suitable for everyone, so you can use the above information to pick a policy that aligns with your health insurance requirements.

If you’re currently covered under a group health insurance plan, we suggest investing in a separate individual health insurance plan, as the latter will stay with you as long as you want. You can use it to plan and achieve your financial goals and remain covered even if you decide to leave your current organization.

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