With the requirements of the Affordable Care Act (ACA) that became effective January 1, 2014, the differences in what group and individual health insurance cover are virtually nonexistent. The removal of underwriting, pre-existing condition exclusions and/or limitations and the addition of guaranteed issue and maternity coverage to both policy types has furthered leveled the playing field between group health and individual health insurance products.
The crucial advantage group health plans continue to enjoy versus their individual market counterparts are tax issue related. What an employer contributes towards the health insurance coverage of their employees is a deductible business expense and in some small group cases may even qualify for a tax credit. In addition, employees can pay for their share of group health premiums using pre-tax dollars under a Section 125 Plan. Pre-tax treatment of employee contributions not only saves employee's money, it reduces net taxable payroll which in turn lowers employer FICA matching expenses which is a further tax savings.
For most individuals who purchase and pay for individual health insurance on their own there are none of these associated tax benefits. That is not to say that some individuals cannot structure their business affairs to get some tax advantages in the individual marketplace but, after the ACA, our system is now set up to continue to tax favor group policies versus individual policies and to tax favor individual health insurance policies via subsidies up to certain income levels up to 400% of the Federal Poverty Level).
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The crucial advantage group health plans continue to enjoy versus their individual market counterparts are tax issue related. What an employer contributes towards the health insurance coverage of their employees is a deductible business expense and in some small group cases may even qualify for a tax credit. In addition, employees can pay for their share of group health premiums using pre-tax dollars under a Section 125 Plan. Pre-tax treatment of employee contributions not only saves employee's money, it reduces net taxable payroll which in turn lowers employer FICA matching expenses which is a further tax savings.
For most individuals who purchase and pay for individual health insurance on their own there are none of these associated tax benefits. That is not to say that some individuals cannot structure their business affairs to get some tax advantages in the individual marketplace but, after the ACA, our system is now set up to continue to tax favor group policies versus individual policies and to tax favor individual health insurance policies via subsidies up to certain income levels up to 400% of the Federal Poverty Level).