Individual and Family Insurance vs. Group Health Insurance

If you are self-employed, unemployed or work for a company that does not offer employee health benefits, buying "individual health insurance" may be your best option for coverage. If you work for an employer who offers a group health plan, many of your choices have already been made by your Human Resources staff, or others in the company. You may have one option, or a choice of several plans that your employer has selected.

One advantage of "employer group plans" (if one is available to you) is that the premium cost is shared by your employer. Small employer group plans in Colorado are "guaranteed issue," meaning that if you are a member of the group, you cannot be denied insurance and it cannot be cancelled due to your health condition.

Some employers choose to offer coverage for health benefits through "self-funded" plans, which are plans that provide specific health coverage, but are not state-regulated insurance. This means the premiums collected from employees are pooled and the employer or the plan administrator reimburses people for covered health benefits from the pool of money. Know whether your health plan is "insurance" or an employer "self-funded plan" (often called an ERISA plan.) If you have concerns or complaints about a "self-funded" plan, the Colorado's Division of Insurance does not have jurisdiction. Employer "self-funded" plans are regulated under the federal Department of Labor and must adhere to a set of rules and laws for that type of health coverage.

When buying "individual" health insurance - whether for yourself or for you and your family, the health insurance carrier is allowed to assess the personal risks, medical history, and health conditions of the prospective members to determine whether to offer health coverage to you and your family, whether to offer coverage with some restrictions, or if a higher or lower rate should be charged based on your health status. The carrier may deny you coverage on an individual policy or provide some coverage, but list exceptions for a condition or illness for which you have been previously treated or diagnosed.

There are many different types of individual health insurance policies in the marketplace. Be sure you understand your options and what you are buying so the coverage you want, and expect, is there should you need it.