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HHS Issues Rules on Preventative Care for Women

HHS Issues Rules on Preventative Care for Women

Group vs. Individual coverage

An important, yet often overlooked, aspect of health insurance is which type of plan do you have or want to have: a group plan or an individual plan? The plans are structured very similarly and offer very similar benefits, but do have some important differences.

Many people have coverage which is provided by their employer. These plans are called group plans, because they are underwritten for and issued to cover a group of people. The great thing about group plans is that you cannot be declined coverage due to a pre-existing medical condition. This is referred to as “guaranteed-issue” in insurance lingo. There may be waiting periods involved with a pre-existing condition, but it is limited to coverage of that specific condition and coverage for the rest of your major medical policy will be issued. The drawback of these policies is that they can be very expensive. Since insurance companies are guaranteeing coverage, then they are going to have higher and more frequent claims to pay. This is one of the reasons why group coverage costs more.

Many people think that group coverage is actually cheaper, but are misled by the fact that much of the cost of the policy is usually absorbed by their employer. In the state of Texas, an employer that offers a group policy is required to pay for at least half of the employee’s insurance premium. Notice that this is employee, not employee and family. Many times, an employer may elect to cover all or part of an employee and their family’s premium, but is not required to do so. This is why many people think that group coverage is less expensive than it is.

Individual coverage is different from group coverage in that it is underwritten on an individual basis (per family) and has the option to decline to issue coverage. This is a bit of a double-edged sword. This practice helps keep prices low by reducing the amount and expense of claims that insurance companies have to pay. However, it also limits access to coverage for those who already have serious health conditions.

These policies are usually about half of the cost of similar coverage under a group policy. They are great alternatives for those who do not have access to group coverage, or for those whose employer does not pay any of the premium on spouses and/or dependents. Of course, to be issued an individual policy, you have to be reasonably healthy. Some common conditions for which insurers regularly decline coverage are: heart attack within last 10 years, recent cancer, diabetes, currently pregnant. Because of this, it is very important to have a good broker who can help you navigate health underwriting and determine which carrier is most likely to issue you a policy.

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