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Confused about providing Individual Medical insurance versus Group Insurance?

Due to the new affordable care law- individuals are able to purchase insurance without the risk about being turned down. And for small groups (under 50 employees) the rates may be better for people to insure individually than through a group.

So let’s review the advantages and disadvantages of each one:

Individual Policies

ADVANTAGES

  • Each participant can pick the plan that they like
  • The plans are easy to obtain and sign up for
  • Based on income the person may be eligible for a subsidy
  • If they select a High Deductible Plan, they may be able to pay for out of pocket costs with a Health Savings Account (use pre-tax money to pay claims)

DISADVANTAGES

  • If an employer wants to pay part of the cost, it will be TAXED
  • If a new employee gets hired, and wants to purchase individual coverage – they may not be able to sign up for coverage till the next open enrollment (ie Jan 1)
  • The employee has to pay for the coverage AFTER TAXES
  • The employee cannot participate in a Flexible Spending Account

Group Policies

ADVANTAGES

  • Employers can provide PRE TAXED subsidy to the cost
  • Employers can provide a Flexible Spending Account so employees can pay out of pocket costs with pre-tax dollars
  • Employees can pay for their share of coverage with PRE TAX money
  • If the plan is through the SHOP program- EMPLOYERS may be able to obtain tax credits for providing insurance

DISADVANTAGES

  • Employees have no choice- have to accept the plans that are offered by the employer
  • Employees nor dependents, in most circumstances, cannot get subsidies based on income

Confused?  Give us a call at (847) 427-8400.