Individual vs. Group Health Insurance in Texas

What is Individual Health Insurance?

In Texas, individual health insurance is a private insurance program designed to cover individuals, families, and dependents that are not eligible for government-run insurance programs such as Medicare and Medicaid. This type of insurance also provides a safety net for people who do not have employee-sponsored health insurance coverage. If you are unemployed, self-employed, or employed by a small-scale business that does not offer health insurance benefits, you may want to consider getting individual health insurance. If you retired early and need health insurance coverage until Medicare kicks in, individual health insurance may be right for you.

Private health insurance companies in Texas generally provide individual health insurance. You will be required to purchase the policy and pay a premium to be covered. A premium is an amount you regularly pay (usually every month) for continued insurance coverage.

Unlike group health insurance plans, individual health insurance is not employer-determined. The policyholder has the full authority to choose/shop the best plan for their needs. Your plan may include the following:

• In-patient hospitalization expenses
• Pre-hospitalization and post-hospitalization charges
• Domiciliary hospitalization
• Alternative medical treatments such as yoga
• Preventive check-up

An individual health insurance plan is especially beneficial for people in and out of the hospital regularly and requires frequent visits to the physician.

Depending on your household size and your earning income, you may be eligible for some types of subsidy that make your health plan more affordable, like the Texas Medicaid, Medicare, or CHIP. Then you can buy from private insurance providers or through the Texas insurance marketplace. The Texas Department of Insurance (TDI) is responsible for regulating the insurance industry in the state. To select an individual health plan according to your needs, speak to a state-licensed health insurance agent for expert assistance.

What is the Purpose of Individual Health Insurance?

The primary purpose of individual health insurance in Texas is to provide insurance coverage for people who are not eligible for certain insurance benefits from employers or the government. Otherwise, these persons will be required to pay their medical bills 100% out-of-pocket, usually at a higher billing rate than someone with an in-network insurance plan. This can reduce the quality of life and life expectancy of affected Texans. Individual health insurance makes it easier for these persons to get proper medical care.

You may ask yourself, why should I get individual health insurance coverage? Well, the answer usually depends on facts unique to you, such as the current state of your health, your age, and your likelihood of falling ill. Read on to better understand individual health insurance plans, their pros and cons, and how they are different from group health plans.

What are the Advantages of Individual Health Insurance?

Even though you may get health insurance coverage from your employer, the coverage may not be extensive enough for your needs. You may consider buying an individual health insurance plan to fill the gap. This plan has the following benefits:

• You do not have to share your coverage because there is a dedicated coverage amount to yourself.
• You can qualify for additional discounts on premiums. These discounts are known as health insurance subsidies or premium tax credits targeted at helping low-income earners in Texas purchase individual health insurance coverage.
• You have the power to pick an insurance provider of your choice and choose a plan that works for both your health and budget.
• Individual health insurance is not tied to your job , which means you will not lose your insurance coverage when you leave the job.

What are the Disadvantages of Individual Health Insurance?

The most significant disadvantage of individual health insurance in Texas is the cost of the premium and other additional payments like deductibles and copays.

Other disadvantages of individual health insurance may depend on whether you are purchasing a short-term health insurance plan or an Affordable Care Act (ACA) health insurance plan. These include but are not limited to the following:

• Acceptance is guaranteed into an ACA health plan, while short-term plans require you to apply and answer a series of medical questions to ascertain whether you can be covered.
• Short-term Medical plan usually does not cover any pre-existing condition ; this means expenses will be out of pocket for these medical conditions. Meanwhile, they are covered in ACA plans. (Note: Some Texas multi-year short-term health insurance plans may cover select pre-existing conditions after an agreed-upon period of active coverage - usually a year).
• Under an ACA plan, as long as you do not default on premium payment, you get to keep the plan. While with short-term insurance, you get to only pick the length of time you want to be covered.
• Short-term insurance plan coverage is available all year round , making it more flexible than ACA plans that require you to wait for a yearly open enrollment period.
• Most individual health insurance policies have waiting periods for some illnesses and maternity benefits.

Ultimately, which individual health insurance plan benefits you more depends on your health insurance needs at the time of purchase.

What are the Types of Individual Health Insurance?

In Texas, there are two major types of individual health insurance:

• Affordable Care Act (ACA)-compliant individual health insurance, which can be purchased on and off the health marketplace, and
• Short-term health insurance - is designed to be used as a temporary coverage solution and does not meet the minimum essential coverage requirements of ACA.

Additionally, health insurance of either type can be further subdivided into four individual health plans:

• Health Maintenance Organization (HMO) plans
• Exclusive Provider Organization (EPO) plans.
• Preferred Provider Organization (PPO) plans.
• Point-of-service (POS) plans.

All four types of individual health insurance are managed care plans ; they contract health care providers to provide health insurance to their members at a discount. All these plans differ and have an advantage over each other. To know the most suitable individual health insurance plan, consult with a state-licensed insurance agent.

Who Needs Individual Health Insurance?

Individual health insurance is for Texans who do not have employer-sponsored or government-run insurance coverage.

Some of these individuals include self-employed persons, part-time employees, young adults who are 26 years of age or older. Individuals less than 26 years old can be covered as dependents under their parent's health insurance plan. Also, when an individual retires before the age of 65 and is not disabled, they will likely no longer be eligible for employer-sponsored health insurance. As such, the individual needs to purchase an individual health insurance plan to protect them before they turn 65 and start getting Medicare coverage.

Individuals without employer-sponsored health coverage who have a higher probability of having health issues should look into individual health insurance. An average hospital stay can cost $10,000 per day, and considering how much more an individual may need to spend out of pocket to take care of medical bills, getting an individual health insurance plan is advisable. There is also the provision for lifetime renewability for individual health insurance, which allows the insured to keep renewing a health insurance policy throughout their lifetime. Lifetime renewability is beneficial to senior citizens who would usually face an increase in the premium due to the increase in age. This feature will allow the insured to renew lifelong without any restriction as to age or any other limit, which automatically eases the insured of any financial hardship in case of any health emergency.

The bottom line is that you need individual health insurance coverage to remain financially safe in the case of a medical emergency in the absence of other coverage.

Speak with a state-licensed health insurance professional to go over the best options to fit your health insurance needs.

How is Individual Health Insurance Different From Employer-Sponsored Health insurance?

Employer health insurance plan, also known as group insurance, is chosen by the employer, who pays a share of the employee's cost of insurance. The remaining portion of the monthly premium is deducted from the employee's salary. However, the rising cost of healthcare makes it difficult for employers to pay for extensive health insurance coverage, resulting in more financial burdens for the employees. This is where individual health insurance gives you the freedom to research suitable health insurance coverage.

Some of the distinct features of individual and group insurance include:

• Under individual health insurance coverage, you still have your coverage after you quit the job. Meanwhile, if you do not have an individual health plan, you lose coverage under employer-sponsored health insurance when you quit your job.
• Employer-sponsored health insurance premiums are likely to be deducted from pre-tax pay , which means that you pay for insurance with pre-tax dollars (before federal and state taxes are calculated), which lower your total taxable income. Meanwhile, under individual health insurance, there is no pre-tax pay. You pay using your savings (after-tax dollars).
• Group health insurance plans usually offer significantly more affordable coverage since the employer covers a portion of the premium while the employee pays the remaining, usually via a deduction from the paycheck. In contrast, the individual health insurance premium is all paid by just you (unless you qualify for subsidies).

When it comes to individual health insurance costs, the Texas insurance providers consider your unique circumstances, like your income, family size, and where you live, among others. Whether you choose individual health insurance or employer-sponsored health insurance, you will likely still face out-of-pocket medical costs like deductibles, copays, coinsurance, etc.

What is Group Health Insurance?

Group health insurance is a type of health insurance policy purchased by businesses in Texas for employees or members of an organization. The employers choose the group health insurance company and select the insurance plan for their eligible employees and sometimes their dependents. The employer also is responsible for sharing the premium cost amongst the employees. Although there is no Texas law mandating small businesses with less than 50 full-time employees to purchase group insurance, the Affordable Care Act requires large businesses to have group insurance for their employees. With group health insurance, the risk (and therefore the cost) is spread among employers and employees.

All group health insurance is ACA-compliant by default (unless grandfathered in).

A group health plan is the umbrella term covering all different types of employer-provided benefit plans. It is like a welfare benefit provided and maintained by the employer or an employee organization providing employees with health coverage. An example of a group health plan is a self-insured health plan or employer-sponsored health insurance plan.

An employer-sponsored health plan in Texas is a group health plan providing health insurance coverage. This plan takes care of the healthcare expenses of the employers and employees at a lower cost since the risk is spread all over the company members in the group health plan. Group health insurance plans must offer coverage to full-time employees while it is optional for part-time employees. Where the employer offers a group health plan to any part-time employees, all other part-time employees must be offered coverage also. Also, regardless of the employees' medical condition, they must not be denied health coverage. The Affordable Care Act allows coverage under a group health insurance plan to extend to dependents, including spouses and children.

What Does a Group Health Insurance Plan Cover?

Typically group health insurance plan provides coverage for:

• Pre-existing health conditions
• Pre- and post hospitalization expenses incurred
• Charges of the medical doctors and specialist
• An infant is covered from day one

Group health insurance does not provide coverage for the following:

• The parent of the employee
• Non-allopathic treatment like homeopathy
• Complications from drug or alcohol abuse

What is the Purpose of Group Health Insurance?

The purpose of group health insurance in Texas is to provide protection and help cover health costs the employee or member of a group may have**. In addition to this, it helps to maintain a good relationship between the business and its employees. Group health insurance aids company growth and development and helps retain the employees in the office. Group health insurance plans differ in each company in terms ofcosts, health insurance provider, and group plan types, but they typically share the same benefits and shortcomings. Some of the advantages and disadvantages of purchasing group health plans in Texas include:

What are the Advantages of Group Health Insurance?

• Group health insurance has proven to play an essential role in attracting new employees and increasing productivity.
• The employers, as well as the employees, get tax benefits. For instance, health insurance premiums are deducted from the employee's pre-tax pay, which means the health insurance payment reduces the pre-tax amount before the state or federal taxes are calculated and deducted.
• Since all group health insurance is ACA-compliant, it covers pre-existing conditions from day one of coverage and has comprehensive maternity coverage for regular deliveries and C-sections.

What are the Disadvantages of Group Health Insurance?

• The employee has little to no control over the choice of the insurance provider and the extent of the individual coverage options.
• Once you leave the job or the association, through which you obtained the policy, the coverage ends.
• Some employees get additional (supplemental) insurance to cover gaps of the group health insurance plan.

Who Needs Group Health Insurance?

Employers who need group health insurance are the ones who need to meet the employer mandate under the Affordable Care Act.

Employers also generally need group health insurance, allowing them to share the premium cost with their employees. Small businesses, that is, businesses with less than 50 employees, can voluntarily provide group health insurance for employees which entitles the employers to tax credits. Employers purchasing group health insurance need to also pay attention to issues like where to purchase a group health insurance plan, the types of group health insurance that will suit the company's budget, and how the group health insurance functions. Consult with a state-licensed insurance agent to learn more about your options under a group health insurance plan.

Can You Decline Employer Health Insurance and Get Obamacare?

Yes, you can decline your employer's group health insurance plan offer if the plan is too expensive or you want more extensive coverage. Now you will wonder: if I do not want employer-sponsored health insurance, can I look elsewhere? Yes, you can, and you can do so by enrolling in an Obamacare plan through the health insurance marketplace. Obamacare is officially known as the Affordable Care Act (ACA) that you and any other Texans can buy as an individual or family health insurance. However, it is essential to note that you will not qualify for the individual marketplace subsidies or premium tax credits if you decline an available group health insurance plan offered by a current employer. You will be responsible for premium payment in full out of your pocket.

There are several other health insurance options that you may opt for if you decide to decline your group health insurance plan. Always consult with a licensed health insurance professional preferably with the most extensive portfolio of insurers and coverage options to fit your needs.

Can an Employer Fire You for Using too Much Health Insurance?

Technically, if you have been hired on an at-will contract, your employer has the right to fire you at any time. However, some laws may exempt you from your employer firing you because of your health. You are protected by the Family and Medical Leave Act, the Americans with Disabilities Act, and the Texas Vacation and Sick Leave Law. If you work for a large company, your employer must notify you before terminating your employment contract. For small Texas businesses, there is no requirement for notice.

If you have been fired for using too much health insurance, you should speak to an employment attorney.

What Happens to Health Insurance Coverage After Getting Fired?

​​If your employer lays you off or fires you, you lose your employer-provided health insurance as part of your total compensation package. To ensure you are always protected, you can always enroll in a new policy through the Texas health insurance marketplace.

Alternatively, you can continue your current policy through COBRA. COBRA offers you limited access to health insurance coverage, which gives you ample time to purchase another health insurance coverage. If your employer is subject to COBRA and you are fired, the employer must give you written notice explaining your COBRA rights. In return, you must notify your employer within 60 days of your intention to continue with your health care coverage. If you decide to continue, you and your family have up to 18 months to stay on your former employer's health plan, and you must continue to pay the full premium.

However, if your employer was not on COBRA or after you must have exhausted your COBRA coverage, you have what is known as continuation rights under Texas law. You have the right to stay on the health plan for nine months if you are not eligible for COBRA and up to six months if you have exhausted the current COBRA coverage. It is important to note that the continuation rights only apply to group health plans issued by insurance companies and HMOs subject to the Texas Insurance Code.

You can utilize the Texas Department of Insurance's consumer publication for more information on COBRA. You can direct your queries regarding COBRA and Texas continuation requirements to the Texas Department of Insurance's (TDI) consumer at (800) 252-3439.

Always discuss your insurance needs with state-licensed, knowledgeable, and experienced health insurance professionals, who can advise you on the full spectrum of insurance solutions offered to the Texas residents.