In the current scenario, health insurance has become a necessity because it is extremely difficult for a family to survive the hefty financial bill of hospital stays without health insurance. This is the reason that many Americans not only need to have high-paying jobs but should also have sound health insurance benefits. Earlier a good majority of the people had employer health insurance or group health insurance. In an employer health insurance plan, the employer provides health coverage to all their employees. The employers do the research and pick an insurance carrier as well as a plan for their employees.
Changes in the healthcare landscape
Over the past few years, the healthcare landscape has greatly evolved. Many employers were forced to reduce their spending due to the turbulent economy and so they started cutting health benefits. The rising healthcare cost has made it difficult for employers to pay for health insurance so they are putting more financial burden on employees. Besides, advanced medical treatments are coming at steep prices, so employers do not provide plans covering these advanced treatments. These changes in the landscape of healthcare are encouraging more and more Americans to choose individual health insurance. In individual health insurance plans, people need to carry out research themselves to find an insurance carrier and a plan that best fits them. Many families in the U.S. will find that individual health insurance is a better option for them even if they have the option of employer-based coverage.
People need to know about these plans in detail so that they can make an educated decision that is right for their families.
About Employer-sponsored Health Insurance
As stated above, employer health insurance is provided by employers who do the research and choose a health plan for their employees. Usually, in an employer-sponsored health plan, employers share the monthly premium cost that is the amount people pay every month to remain covered. The employers automatically deduct the employee’s share of the premium from their paychecks. Some of the benefits of employer-sponsored health plans include:
- A certain part of the monthly premium is paid by the employers.
- The complex task of choosing a health insurance carrier and picking the right health plan is carried out by the employers, so employees don’t need to invest time and effort in searching for a perfect health plan. This is a great relief for people who are not familiar with the health insurance market and find it difficult to understand this market.
- The employers deduct the monthly health insurance premiums of their employees from their pre-tax pay which means they pay for their monthly premium before paying any state or federal taxes. This considerably lowers their taxable income.
About Individual Health Insurance
People looking to have individual health plans need to carry out research themselves for finding a perfect health plan that allows having better control over their and their family health insurance options. People can purchase individual health plans in a couple of ways, they can either purchase a plan from the marketplace operated by the federal government. People may find themselves eligible for a subsidy depending upon their income and household size that will further make health insurance much affordable for them. However, people should know that they can purchase health insurance only during the Open Enrollment Period, or when they experience a qualifying life event. Another way through which people can purchase health insurance is by selecting a private health insurance plan that they can directly purchase from insurance companies or online or through brokers and agents. Some of the benefits of individual health insurance include:
- Individuals will have the option to choose the carrier as well as the health plan of their choice that will meet their needs.
- Since health insurance will not be tied with their jobs, people will be able to change the jobs without the fear of losing coverage.
- People will have the option to choose a plan that has their preferred doctors and hospitals in their network.
- People depending upon their income may be eligible for the government’s subsidy that will make their coverage more affordable.
Side-by-side comparison of Employer-sponsored plan Vs Individual Health Insurance
Now with people aware of the advantages of both employer health insurance and individual health plans, let us carry out a side-by-side comparison between employer-sponsored plans and individual plans so that people are aware of differences and can easily make an informed health insurance decision for their family.
|Individual Health Plans||Group Health Plans|
|Plan Purchaser||Individuals themselves||Employers|
|Freedom to choose a plan||Yes||Limited|
|Option of keeping the plan in case of the job change||Yes||Limited|
|Coverage of pre-existing conditions||Yes||Yes|
|Premiums are paid with pre-tax income||No||Yes|
|Premium Costs||Individuals pay themselves||Employers pay a part of the employees’ premiums|
Cost of Employer Health Plan vs. Individual Health Plan
Now people might be having a good understanding of the difference between an employer-sponsored health plan and an individual health plan, they may be interested to know which health plan costs less. It is quite difficult to give a clear answer on the cost of both the plans, as several factors influence the price of the health plans. Individual’s income, their family size, and the area where they live are the main factors that decide the annual premium.
The average premium for an employer-sponsored health insurance plan for one person is:
- The total Annual Premium of an employer-based plan is $6,368 in which employee contribution is $1,415 and employer contribution is $4,953.
The average premium for an individual health insurance plan for one person is:
- The average annual premium of an individual plan for a person is $7,344 and for a person receiving premium tax credit is $1,044.
Though these figures can give people an idea of costs, but the exact health insurance amount entirely depends upon their specific circumstances.