Pros and Cons of Group vs. Individual Health Insurance
There are two forms of health insurance in Canada, public (basic) and private (extended) health insurance.
Public health insurance covers basic medical services while private health insurance plans are more extensive covering costs for medical services that public health insurance doesn’t provide, including prescription medications, dental care, ambulance services, dental care, and eye care.
Private health insurance can be bought individually (individual health insurance) or can be offered by employers (group health insurance) as a perk or benefit to their employees to boost morale, productivity, and retention.
But which is better: Group or individual health insurance? What are the advantages and disadvantages of each plan for an employer and employee? Which plan would be best suited for your business or family’s needs?
In this article, we will answer these questions and a lot more. Read on!
Key Takeaways:
- Group health insurance is a health insurance plan offered by Canadian employers as a benefit to their employees and their dependents.
- Individual health insurance is a health insurance plan that Canadians can buy directly from insurance providers.
- Both plans come with their advantages and drawbacks. Group insurance is more cost-effective while individual plans offer greater flexibility and potential tax advantages for employees.
Group vs. Individual Health Insurance – Pros & Cons
To understand the pros and cons of each of these health insurance plans, let’s take a look at the benefits health insurance plans provide and how both these plans cope in comparison.
Cost of Premiums
Group health insurance premiums are lower than individual health insurance as the risk for insurance providers is spread over multiple employees or a group, rather than a single individual. As such, the more participants involved in a group health insurance plan the lower the monthly premiums are per employee.
In Group health insurance the cost of premiums is often split between the employer and employees. This means that employees pay a much lower monthly premium for comprehensive healthcare coverage than they would with an individual health insurance plan.
Individual health insurance is thus more expensive as there are no employer contributions and greater risks resulting in much higher premiums.
However, depending on income level and other factors, individuals may be eligible for government subsidies and personal tax benefits to help them offset premium costs for individual health plans. To learn more, consult with a trusted insurance broker.
Flexibility & Control
As group health insurance plans are employer-selected there is a lot less flexibility and control when it comes to customizing coverage to suit personal needs.
These plans are designed to cater to a group that may not suit the specific healthcare requirements of every employee and while they may offer access to a broad network of healthcare providers, employees are restricted only to that network limiting their flexibility when choosing specialists or doctors.
Individual health insurance offers a lot more customization as these plans are tailored specifically for an individual, ensuring that their unique healthcare and coverage needs are provided for.
Individual plans also offer more freedom when it comes to choosing healthcare providers and more control as individuals can choose what carrier they want to go with, their plan design, and the network of health providers they would like access to which isn’t possible with group plans.
Portability
Group health insurance plans are tied to employment. If an employee decides to leave their job they would lose their coverage until they transition to a new job and get new insurance. This can leave a coverage gap.
Individual health insurance isn’t tied to employment. Individual coverage can be maintained as long as premium payments are being made which makes this sort of plan a lot more portable. There are no coverage gaps and individuals are assured continuity of care.
Tax Implications
Group health insurance offers tax benefits to the employer, not the employee. This is why it is recommended that even small businesses in Canada offer group health insurance to their employees as it can help with not just hiring and retention but also considerable tax benefits to the employer.
Individual health insurance, on the other hand, can offer potential tax benefits to employees or individuals in the form of premium deductions on personal taxes.
Medical Underwriting & Pre-Existing Conditions
Group plans generally do not require any form of medical underwriting. This can be hugely advantageous for employees with pre-existing medical conditions as they can not be denied coverage or charged higher premiums in a group plan.
Individual health insurance plans, however, often require medical underwriting and include exclusions for pre-existing conditions which can increase the chances of coverage denial or result in absurdly high premium quotes.
Health Insurance Made Simple with McIver Insurance
As discussed, both group and individual health insurance come with their own set of pros and cons. Choosing which is better for you all comes down to your personal circumstances and unique healthcare needs.
Whether you are an employee or a business owner in Nova Scotia, if you want to learn more about what health insurance plan would be most suited to your needs it is best you speak to one of our trusted insurance advisors by calling us at 1-902-220-3279 or emailing [email protected]
FAQs
Q) Can you have both group and individual health insurance?
Yes, you can have both group and individual health insurance. If your group plan doesn’t offer coverage for your specific health care needs it is recommended to opt for an individual health insurance plan to cover all bases.
Q) Can you keep the same group health insurance plan if you change jobs?
No, your group plan expires once you leave your current employer. Your new employer will have their own group plan which you can choose to opt in or out of. Until that transition occurs there may be a coverage gap.
Q) Is it beneficial for small businesses to offer group health insurance to their employees?
Yes, small business owners in Canada are incentivized to provide health insurance to their employees. Employer-paid premiums for group health insurance plans provide taxable benefits that can help offset the cost of premiums for the employer. Group plans can also be beneficial for attracting new talent, boosting retention, and even improving employee morale and productivity.
