Underwriting: Individual vs Group Insurance

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Which is easier to qualify for, individual or group medical insurance? And which offers the most competitive pricing / benefits?

Let’s review:

Individual health insurance is not medically underwritten. No health questions, no height & weight questions, nothing. Guarantee issue, pre-existing conditions covered. It has never been easier!

For groups of 50 employees or more, group health insurance is a different story. The plan sponsor must disclose medical conditions within the group, provide large case management notes, and sometimes an Attending Physician Statement is required. If coverage is offered (not guarantee issue for large groups – 50 + employees), under a self-funded arrangement stop loss protection often demands lasers for “sick” plan participants.

Under ACA, benefits have taken a  cookie cutter approach. Several plans to pick from, all the same from carrier to carrier, sort of like government mandated Medicare supplement coverage(Plans A-F, etc). So benefits are the same whether individual or group.

What about costs?

Individual coverage rates are age banded. Group health insurance rates are not. In  many cases individual insurance is cheaper than group, especially if you accept a welfare payment (i.e, subsidy paid with other people’s money).

The byproduct of ACA, goofy as it may appear,  is it’s easy to purchase individual health insurance than to qualify for group insurance in today’s market, completely opposite of what we have been accustomed to in the past.

Editor’s Note: Can employers forgo group coverage and instead offer individual coverage through payroll deduction while contributing to the cost on a defined contribution basis? Will the employer thus avoid ACA punishment (taxes)?

FROM A MIDWEST CONSULTANT: “No!”

 

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