Merritt Personal Lines Manual: Health Insurance: Group Policies and Underwriting Introduction

Health coverage is packaged for sale to both individuals and groups. Most people in the United States get their coverage in a group package. And most of the group plans are sold to companies...and their employees.

Business health care spending increased more than seven-fold between 1965 and 2004. With medical costs on the rise through the 1990s and 2000s, various management surveys show that healthcare expenditures remain the single most important concern for U.S. employers.

Although group and individual health insurance policies share many of the same policy provisions, there are significant differences.

In an individual policy, the contract is between "you" and your insurance company. In a group policy, the contract is between the company and your employer, union, trust or other sponsoring organization.

A caveat: Your family members may be covered under both group and individual policies. But you should determine how they will be covered before signing on to either kind of policy.

While group policies may have fewer limitations, they do have one important drawback. If you change jobs, you may no longer be covered under your last employer's group policy. However, individual health insurance contracts continue regardless of change of employment.