How individual health insurance differs from group benefits

Health insurance is complex. With so much information available online these days, sorting out what might work best for you may feel next to impossible. But there are a couple facts that may help—knowing the difference between individual and group benefits health insurance.

Individual health insurance is where you buy health insurance directly from an insurer—like Manulife—yourself. Group benefits health insurance is where you get health coverage as part of a larger group, through your work or another organization.

Individual health insurance plans include a series of health benefits, like drug coverage and vision care, under one plan. You buy a policy or plan directly from an insurance provider.

It’s called an ‘individual’ health insurance plan because you buy and manage it on your own. Buying this type of insurance is optional. Some insurers may call individual insurance plans by different names, such as personal or private health insurance, but they all work the same way.

Individual health insurance may be a good option if you don’t have any benefits through work. This would include:
 

• self‑employed people
• part‑time workers
• people transitioning between jobs
• retirees or people who are close to retirement
   

Individual health insurance can be especially helpful if you need or want to:
 

• replace employer benefits that you lost due to job change or retirement
• supplement your provincial health coverage (if provincial coverage doesn’t meet all your health care needs)
• add more coverage to your current group benefits plan
   

Typically, individual health insurance covers:
 

• Prescription drugs, including generic and brand-name medications
• Dental care, from basic services to more advanced treatments
• Vision care, such as eye exams, glasses or contact lenses
• Paramedical services, like massage therapy, physiotherapy, or chiropractic care
• Mental health support, including psychotherapists, social workers, psychologists, and other mental health professionals
• Medical supplies and services, such as orthotics, hearing aids, and ambulance services

Unlike individual insurance, group benefits health insurance plans are provided by an employer or through an organization you’re a member of. They typically offer health, dental, disability, and/or life insurance coverage. Your employer (or the organization) works with an insurance provider to create a plan together. Employees or members must meet certain criteria to receive the benefits. Coverage often extends to the member’s immediate family, such as a spouse or dependant children.

Cost

The cost of group benefits plans are typically shared between the employer and the employee. Employers may pay all or part of the monthly premium while employees often contribute a portion through payroll deductions. The costs vary by plan and types of benefits. Group benefits premiums are usually lower per person because the costs are shared across a large group. They also tend to be more stable from year to year.

Eligibility

The employer decides who’s eligible to join their plan. There’s typically a probation period or minimum number of hours a person must work before benefits start. Answers to medical questions are not required to access basic coverage with many group plans.

Portability

Group benefit plans are tied to your work, so if you leave the job, retire, or no longer meet eligibility rules, your coverage usually ends. Sometimes, temporary options let you keep some of your benefits for a while after leaving. But options are usually limited and less flexible than what a new individual plan might offer.

Renewal

Group benefit plans usually get renewed once a year. They’re intended to stay the same for one full year from renewal date. Coverage amounts and features at renewal sometimes change based on the employer’s business needs, costs to provide the benefits, or changes in the workforce.

The costs for health insurance can vary significantly. In Canada, we’re fortunate to have universal health care, which covers a lot, but it has its limits. Adding health insurance to what the government covers can help fill any gaps. Cost is often a key factor in deciding if an option might work for you.
 

With individual insurance, you pay 100 per cent of the cost. With group benefits, costs are shared between employer and employee. While an employee may want to add benefits and customize their plan to fit personal needs, those added benefits likely add cost.

Individual insurance premiums are typically higher, more personalized, and vary depending on the person’s age and health. Group benefits premiums tend to be lower per person, more stable, and often partly paid by an employer. From a cost-efficiency perspective, group coverage is almost always a better value than individual health plans. However, individual plans make health insurance coverage available to almost anyone, regardless of employment status.

Also, with individual insurance, health needs can vary widely person to person. Some may only want prescription and dental coverage while others may prioritize paramedical services or emergency travel insurance. With personalization available through individual insurance, you can choose to pay for coverage you value and avoid paying for coverage you don’t really need.

What’s covered in a health plan can look quite different depending on each insurance plan. Coverage levels, annual limits, and waiting periods can also vary. If you have a pre-existing health condition, it might be excluded from your coverage or have limits on what may be paid per year, depending on the plan.

As may be clear by now, there’s more flexibility around choices and options with individual plans. They let you choose benefit types, coverage levels, and add-ons that match your life stage, family situation, and long-term priorities.

By comparison, group plans are set up to meet the health care needs of a broad employee population. They typically bundle a standard set of benefits and make it available to all employees. These include health, dental, life insurance, and sometimes disability coverage. Options to customize a policy tend to be limited. 

Since group benefits end when employment ends, looking for other individual health insurance may become a priority. Some employers offer individual insurance, like Manulife’s FollowMe plan, which lets you continue certain benefits after you leave employment. Those benefits are usually time-limited, however, and less flexible than the group plan was.

That’s the helpful thing about individual insurance plans. They always stay with you. And that continuity, regardless of job change, can give you a sense of security and protection. Regardless of what happens work-wise, your health insurance follows you, so long as you pay the monthly premiums and continue to renew it each year.

If you find an employer’s plan lacking in some way when it comes to your personal, financial, or family health care needs, you may want to consider adding an individual insurance policy. This cost may be a part of an overall financial plan. Individual plans can fill health care gaps, provide customization and security not tied to employment. People with chronic conditions or who need higher coverage limits or stable long-term coverage may be good candidates to buy an individual health insurance policy.

Understanding the differences between group benefits health insurance and individual health insurance can help you make the best insurance-buying decision for your health care needs. Whether you have group benefits through work, individual coverage, or a combination of both health insurance types, it’s important to know your options so you can make a plan that works for you. If you’re unsure which option might fit your situation, reviewing your current coverage and potential upcoming life changes can help. It may be time well spent. Your future self may just thank you as life changes if you find later that you need some financial support to cover extra but unexpected health care expenses.