The health insurance marketplace is certainly challenging, yet count your lucky stars that will at least you have choices. To that end, this article is going to explore the pros and cons of group health insurance.
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Group health monthly premiums are subsidized by the employer. Usually, an employer must contribute at least fifty percent of the “employee only” premium. Therefore, if you are the employee, you can probably get a richer health plan for much less premium than you would pay in the individual health marketplace. However , the price to add your dependents to the employer’s plan, may be cost prohibitive. In this case, and assuming that your dependents can qualify, then you may want to put them on a person health plan.
Group health monthly premiums for large families are the same regarding small families; whereas in the person market, you pay a separate premium for every family member. So , if you have a huge family, you may be able to get a much better deal by adding them to your employer’s plan. As with any insurance change although, don’t make any changes with out consulting with an experienced insurance advisor inside your state.
Group health insurance in most states is guaranteed issue – which means that you can’t be turned down because of pre-existing health conditions. This is a real blessing in case you or a family member has a medical condition that will prevents you from qualifying for an individual plan. But , this is a double-edged sword. While being guaranteed problem is a huge benefit for those with pre-existing medical conditions, it does come at a price. This one feature alone accounts for the majority of the disparity between group and person insurance premiums. Yes, that is right – in most states, individual health premiums are almost always less expensive than group health premiums.
Most group plans include maternity. So , if you are planning on having more children, you should definitely consider hopping on to a group plan. While you can add a “maternity rider” to individual plans, these riders tend to be expensive, restrictive, and otherwise provide less value than the coverage you may get in a group health plan. That being said, if you are considering having more children, we recommend that you contact the health insurance advisor in your state with regard to advice about what is best for your family. The best answer is different for each unique family members.
Economies of scale can benefit employees of large employers. It is accurate that the larger the group, the larger the chance pool is in which to share the risk which CAN result in lower premiums than are available in the individual health market.
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However , the guaranteed issue “issue” CAN wreak havoc on this type of program. For example , a large employer with good benefits tends to retain employees regarding long periods of time. Eventually, the average age of the girls starts to creep up and so do premiums. In addition , people with large healthcare needs (expensive medical conditions) are generally attracted to large plans because they are guaranteed issue with good coverage. And so, as time passes, not only is the group’s average age increasing, but the group is also bringing in employees with large expected wellness costs. This is the dilemma that we see with large health plans like the U. S. auto-makers and even federal government plans. Eventually, those with lots of healthcare needs begin to outnumber those with little or no needs and so premiums are powered higher and higher.
Group Medical health insurance Cons
Group health insurance can be more costly than individual health insurance. ln reality, if you don’t factor in the employer’s contribution towards premiums, then individual programs are almost always more affordable than group programs. However , as we discussed earlier, not every you can qualify for an individual plan.
What happens if your employment is terminated (by you or your employer)? Yes, you will probably have some benefit continuation rights (through COBRA or state continuation programs), but these benefits can be very expensive as well as the term limited. So , eventually, you either have to secure another job with benefits, an individual health plan (assuming you are insurable), or possibly sign up for a government health insurance program for that uninsured (if you are not insurable). Allow me to emphasize, that you should NEVER be with out some form of major medical health insurance. Being with no this insurance puts you and your family in serious financial jeopardy. In fact , a current Harvard University study found that will 50 percent of all bankruptcy filings had been partly the result of medical expenses. ¹ To the same point, every 30 seconds in the United States, someone files with regard to bankruptcy in the aftermath of a serious health problem. Don’t let this happen to a person.
Group health insurance premiums are increasing faster than individual health insurance payments. Why? Because most group programs are guaranteed issue and since they accept “all comers”, they tend to attract those with high medical expenses. On the other hand, most individual health insurance plans are medically underwritten. This means that the insurance company can say “no thanks” to any application that it deems not to be in its interest. Put your self in their shoes – would sign a contract to provide $30, 000 within annual benefits to someone that has been only going to pay $3, 500 in premiums (for an internet loss of $27, 000) if you didn’t have to? Hmm… let me consider that one. The answer is a resounding “NO! “. Because of this underwriting process to get individual health insurance, insurance companies can manage their risk and more effectively manage their profitability, resulting in more stable prices.
As you can see, there is no clear reduce answer as to which type of insurance plan is the best. The answer depends on a number of factors and is different for every unique scenario. The best advice I can give you while you consider your health insurance options — get good advice from an experienced health insurance advisor.