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Individual vs Group Health Insurance - What’s the Difference?

  • Nov 21, 2023
  • Health Insurance

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The health insurance industry often uses specialised language which could be confusing, especially if you’re new to health insurance. Knowing some of the terms and phrases used by health insurance providers could come in handy when shopping for a plan.

If you previously came across the phrases “individual health insurance” and “group health insurance” but didn’t know what they refer to, this article aims to offer you the clarification you need about what they mean and what the difference between them is.

What is the difference between individual health insurance and group health insurance?

Both individual and group health insurance provide private healthcare cover to people. However, individual health insurance is taken out by a person for themselves or for their family, while group health insurance is taken out by a company for its employees and/or owners.

When it comes to what’s covered and how to make a claim, individual health insurance and group health insurance work in similar ways; but the main distinction is how the policy is administered including who is responsible for paying the premium and who holds the authority to make changes to the policy.

Individual health insurance is a contract between a person and a health insurance company. The person taking out the policy is typically responsible for paying the premium and they can choose the level of cover they require. Anyone insured under the policy can make a claim.

Group health insurance is a contract between an employer and a health insurance company with the employer being responsible for paying the premium and being able to decide what cover is offered. But the people benefiting from group health insurance and being able to claim are the members of that group policy, the company’s employees.

What is individual health insurance?

Individual health insurance, also called ’personal health insurance‘ refers to the health insurance cover taken out by you personally, directly from an insurer or through a broker. On the other hand, if you have health insurance through your employer, this is not considered individual health insurance.

Individual health insurance can cover one or several people, such as:

  • You only
  • You and your partner
  • You and your children
  • You, your partner, and your children

If a health insurance policy is taken out by a person rather than a company and it covers multiple people, this is still referred to as ’individual health insurance’.

How does individual health insurance work?

Individual health insurance is taken out and paid for by the policyholder (the person signing the contract with the insurer) who also has the authority to make changes to the policy, but anyone covered by the same policy can make claims, such as the policyholder’s family. With health insurance, individuals can cover the cost of private medical treatment for acute medical conditions which first arise after the policy is taken out. Medical exclusions and benefit limits may apply.

Depending on provider, individual health insurance can cover:

  • Medical treatment and diagnostic tests while you are in hospital, often referred to as inpatient treatment.
  • Medical treatment while you are a day-patient and don’t require to be admitted overnight.
  • Cancer treatment.
  • Outpatient treatment such as specialist consultations that don’t require to be admitted in a hospital.
  • Other health benefits such as alternative therapies, mental health and virtual GP.

Find out more about private health insurance and its benefits.

What is group health insurance?

Group health insurance refers to the health insurance taken out by a company. It is also often referred to as company health insurance, business health insurance or corporate health insurance. In this case, the policyholder is the company rather than a person, but the policy is often managed by a designated “group administrator” which is usually a person within the company who has decision-making power such as the owner, the finance director, or the HR manager.

As the name suggests, group health insurance usually covers a specific group of people within a company, such as:

  • The owners of a company
  • The management line of a company
  • The employees of a company

Is group health insurance the same as family health insurance?

’Group health insurance’ might be confused with ’family health insurance‘ but they are not the same thing in the health insurance market. Even though family health insurance covers more than one person under the same policy, this is still considered an individual plan because is not taken out by a company. On the other hand, ’group health insurance‘ is used to refer to company or business health insurance.

How does group health insurance work?

In the case of group health insurance, the policyholder is a company and not a person, but is represented by a group administrator who has authority to choose what cover to provide and to make changes to the policy. Group health insurance is paid for by the company but, in some cases, the cost might be shared with the members.

Anyone covered by the group policy can make claims to the health insurance provider to cover the cost of their private medical treatment for acute medical conditions which first arise after the policy starts. Like individual health insurance, group health insurance can cover inpatient treatment, day-patient treatment, cancer treatment, outpatient treatment and other health benefits such as alternative therapies, mental health, and a virtual GP. Medical exclusions and benefit limits may also apply.

Find out more about group health insurance and its benefits.

Conclusion

Whether you’re an individual or a company looking for health insurance, understanding some of the terminology used in the health insurance market might be useful when navigating the information available online. In this article, we explained the difference between individual health insurance and group health insurance, and we saw that individual health insurance refers to the health insurance taken out by a person for themselves or for their family whereas group health insurance is taken out by a company for its employees.

Looking for health insurance?

Freedom Health Insurance offers both individual health insurance for you and your loved ones and group health insurance for your workforce.

If you’re after individual health insurance, you can get a quick, online health insurance quote here. If you’re looking for group health insurance, contact your broker or get in touch with us.

Disclaimer: Freedom Health Insurance can’t offer advice on which cover could be best for your business. To receive independent advice and compare different providers, you should seek the services of a health insurance broker.