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Individual Vs. Group North Carolina Health Insurance Coverage

Individual Coverage vs. Group Coverage

Health insurance coverage is offered either through an individual policy or group coverage. Under an individual policy, the policyholder is the insured person. Under a group policy, the policyholder may be an employer, association, trustee, etc., while the insureds are the members of that employer or other organization. Under group policies, the group (policyholder) generally has the right to continue, terminate or request changes to the group plan which, in turn, affects the coverage of all individuals insured under the group. Under an individual policy contract, those rights rest with the insured individual.

Individual Health Insurance

An individual health insurance policy is a contract between you and the insurance company. You are the policyholder and a party to the insurance contract. An individual health insurance policy may cover one person or several family members. Typically, individuals purchase this type of coverage when they are not employed, or when they are employed but do not have access to group coverage. Also, individual health policies may be used to supplement Medicare.

Although individual coverage is often more expensive than similar coverage under a group policy, it can be an important means of ensuring that a person has the health insurance coverage he needs, whether for a long time or for a short period between jobs. Most people applying for an individual policy are subject to being underwritten by the insurance company. This means that the insurance company may review the individual's health history, and refuse or limit coverage based on that history (this may not apply if you are a HIPAA-eligible individual. Read more about HIPPA on page 8). However, once an individual is covered, an insurance company may not terminate or refuse to renew an individual policy unless it offers each affected individual the option to purchase any other individual health insurance policy that it offers. This feature is known as "guaranteed renewability." Please note that a company may decide to terminate all of its individual health insurance policies with proper advance notice.

Group Health Insurance

Many employers offer group health insurance to their employees as an employment benefit. Some employers offer only one plan while others offer a choice of plans. No employer is required to offer health insurance; however, if this benefit is offered, it must be offered to all eligible employees (eligibility requirements usually include permanent status and working 30 hours or more per week).

Under group coverage, a master group policy is issued to the group policyholder (the employer), and covered participants receive a certificate or handbook that summarizes the benefits and provisions outlined in the master group contract. Also, many group policies provide the option of covering dependent family members. Employers may require eligible employees to satisfy a waiting period of up to 90 days prior to being added to the plan. Under employer group health insurance plans, the employer is the policyholder and the employee is a plan participant. As the policyholder, the employer does not need the consent of plan participants to change insurance companies, make changes to the plan, cancel the policy or agree to new premiums or benefits. However, North Carolina law requires employers to provide 45 days notice to their employees when they plan to cease offering health insurance. No company may cancel or refuse to renew coverage for individual eligible participants if it continues to cover the rest of the group.

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