ACTIVEWAVE
  • HOME
  • OUR STORY
  • GET STARTED
  • BLOG
  • CAREERS

Healthcare Blog

Would I be better off buying an individual medical insurance plan?

4/5/2016

 

By Pete Brately

As an insurance professional, friends often ask me for advice on their personal medical insurance. The most common question is: "My company offers medical insurance at work, but premiums and cost sharing are high. Would I be better off buying an individual/exchange medical insurance plan?"
​Answer:
While there's no 100% definitive answer, in most cases your employer-sponsored plan will be a better financial choice.
Picture
Why? Here are a few factors:
  • Employer-sponsored medical insurance is purchased with pre-tax dollars. This is a huge advantage. You must add in your net effective tax rate into any individual policy cost analysis.
  • Group rates are lower. Carriers can price groups lower because: (1)There is a spread of risk and higher likelihood of profitability for multiple members compared to individuals. (2)Administrative costs are lower for groups due to economies of scale. (3)The ACA guarantee issue individual/exchange regulation mechanism has a serious flaw that effectively allows members to sign up during open enrollment then drop their plan after receiving care, which impacts carrier profitability.
  • Employers are customarily required (by carriers) to contribute the lesser of 50% or $100 per month of the employee-only premium which substantially reduces employee cost.
  • The main non-premium drawback of individual/exchange plans is provider networks. Benefits are similar to group plans for their corresponding metallic tier(bronze, silver, gold, platinum), but some individual/exchange plans have limited provider networks and prescription drug formularies.
3 scenarios where an individual policy might make more sense:​
  • Young employees(in your 20's) might find a better deal with an individual plan if their company has over 100 employees and the composite medical rate is high(due to a high average employee age and/or high claims experience).
  • Healthy employees who rarely see a doctor might benefit from purchasing an individual/exchange narrow network and/or high-deductible plan if one is not offered at work.
  • Spouse & children might get a better deal by purchasing an individual/exchange plan if: (1)Your spouse & children are eligible for exchange subsidies. (2)Your company does not contribute to the family portion of the premium. (3)Your spouse & children do not mind narrow provider networks.
Bottom line:
In most cases, the medical plan your employer offers will be the best financial deal, but it is always a good idea to look at all of your options.

Comments are closed.
© 2023 ​​ACTIVEWAVE INSURANCE SOLUTIONS
​
CA Insurance License 0F03547
​
Privacy Policy
Picture
  • HOME
  • OUR STORY
  • GET STARTED
  • BLOG
  • CAREERS