Today, it is almost impossible for a family to survive the financial blow of hospitalization without health insurance. That’s why for many American families, having good health insurance benefits is almost as important as having a good salary.
In the past, most families had employer health insurance, also known as group coverage or group insurance. With employer health insurance, employers do their research and choose the insurance carrier and plan options for their employees. However, the healthcare landscape has evolved tremendously in recent years:
- A troubled economy has forced many employers to cut spending and cut health insurance benefits.
- The rising cost of health care has made it more difficult for companies to pay for health insurance, placing a greater financial burden on employees.
- Advanced treatments, drugs, and technologies help people stay healthier, but they come at a high price.
These changes have sparked a growing trend: More and more Americans are choosing individual health insurance, also known as personal health insurance. With individual health insurance, you have the freedom to do your research, select your own insurance company, and choose your plan. For many families, individual health insurance is a better option, even if employer-sponsored coverage is an option.
Are you trying to decide if the employer-sponsored health insurance or personal health insurance is better for your family? Read on for the information you need to know about these different types of plans. Understanding the pros and cons of these options will help you make an informed decision that is right for your family.
Employer-funded health insurance
As mentioned above, your employer chooses employer health insurance. Your employer does the research, chooses the insurance company, and selects your plan options. Generally, your employer shares the cost of your premiums, which is the money you pay each month for your health insurance. Generally, your portion of the premium will be automatically deducted from your salary. Employer-sponsored health plans can have many advantages, including:
- Your employer contributes to the premium payment.
- Your employer does all the research and works to choose plan options. This task can be time-consuming and possibly confusing if you are not familiar with health insurance.
- Your health insurance premiums are likely deducted from your paycheck on a pre-tax basis, which means you pay for your health insurance before federal and state taxes are taken out, reducing your taxable income.
Individual health insurance
In personal health insurance, on the other hand, it’s up to you to do the research, choose an insurance company, and select your plan. This option gives you more control over your family’s health insurance options.
There are a few different ways to purchase individual health insurance. One option is to purchase a health insurance plan on the Marketplace, which is run by the federal government. Depending on your income and family size, you may be eligible for a subsidy, which can make your health care more affordable. Plans offered in the Marketplace can only be purchased during open enrollment or if you experience an enabling event.
Another option for obtaining individual health insurance is to select a private health insurance plan. Private health insurance can be purchased directly from insurance companies, through agents, brokers, or online.
Here are some of the advantages of personal health insurance:
- You have the power to choose the best company and plan to meet your needs.
- Your health insurance isn’t tied to your job, so you can change jobs without losing coverage.
- You can choose a plan that includes your preferred doctors and hospitals.
- If you’re eligible, you can get a government subsidy, which makes your coverage more affordable.
Employer-funded health insurance compared to individual health insurance
Now that you know the advantages of both group and individual coverage, let’s take a look at them side by side so you can compare the differences and make an informed decision for your family.
Add extra protection with supplemental health insurance
Regardless of whether you choose employer-sponsored coverage or individual health insurance, you’ll likely still have many out-of-pocket medical costs. The costs of deductibles, copays, coinsurance, and non-covered treatments can add up quickly with a serious illness, accident, disability, or hospital stay.
You can help protect your family from high out-of-pocket medical costs with supplemental health insurance. Supplemental health insurance is in addition to your main health insurance, whether group or individual. It is intended to help pay for costs that may not be covered by major medical insurance. With supplemental health insurance, benefits are paid directly to you or your beneficiaries, not to doctors or hospitals, which means you can use the money any way you choose. Benefits are paid regardless of any other insurance you have, whether you have employer-sponsored or individual health insurance.
