Switching From Group Health Insurance to an Individual and Family Plan

Once upon a time, just a few years ago, employers almost unbegrudgingly added health insurance to their employee benefit package and as insurance costs began to rise, this perk became highly prized by employees. Everyone was happy. Employers who offered good perks, got to pick from the cream of the employee crop, and employers had their health care costs covered.

Things changed, as all things inevitably do and a darkness covered the land. The American economy slowed; available jobs decreased and health care costs sky rocketed. It has been estimated that employer-sponsored health-care costs rose by 9.3% in 2005, 7.7% in 2006 and 6.1% in 2007.

On average, employers currently pay, $3,785 a year for single-person coverage and $8,824 to cover a family, passing 16% of that premium, to individual employees, and 28% of it to families.

Smaller employers often charge their employees less for single coverage while significantly increasing it for family coverage. Things are expected to get even worse for employees as, according to one survey, 40% of large employers say they are “very likely” to increase the amount of employee contributions to health insurance in the next year.

Back in the days when the Sun shined and birds chirped, no one fortunate enough to receive coverage from their employer would have ever conceived of opting out of their group coverage and buying health insurance on the individual market. The cost of individual health plans were comparatively much too high, but as the skies darkened, as health-care expenses began to grow and companies shifted a greater percentage of those costs onto their workers, individual coverage begans to look like a very viable alternative to employer sponsored group coverage.

Many employees are now opting to retain their group health insurance for themselves alone, while moving their family members off of group coverage and enrolling them instead in an individual or family medical plan.

This strategy can save a family thousands of dollars a year, however there are some pitfalls and some major risks here. Do not make this decision without consulting a licensed professional who can warn you in advance of possible trolls hiding under your health insurance policy bridge.

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