What is individual health insurance?

By Holly Bengfort on Sep 25, 2025 4:01:00 PM

<span id="hs_cos_wrapper_name" class="hs_cos_wrapper hs_cos_wrapper_meta_field hs_cos_wrapper_type_text" style="" data-hs-cos-general-type="meta_field" data-hs-cos-type="text" >What is individual health insurance?</span>

If you’re used to employer-sponsored group health insurance, you may not be familiar with individual health insurance. Individual health plans are purchased by individuals, not employers. But with the growing adoption of individual coverage health reimbursement arrangements (ICHRAs), more employees are gaining access to this option for the first time.

In this article, we’ll explain what individual health insurance is, how it works, and how it relates to an ICHRA.

In this blog post, you’ll learn:

How to shop for individual health insurance coverage.
How individual coverage differs from group coverage.
The benefits of having an individual health insurance plan.

Understanding individual health insurance

Unlike group health insurance, where an employer chooses one plan for all eligible employees, you purchase individual health insurance for yourself and your dependents.

You can buy coverage:

Through your state’s health insurance exchange or the federal Health Insurance Marketplace (HealthCare.gov).
Directly from an insurance company.
Through a licensed insurance broker or insurance agent.

When you enroll in individual coverage, you choose a health plan that best fits your medical needs and budget. Coverage typically lasts for a full calendar year if you enroll before December 15, with options to renew or switch plans during the annual Open Enrollment period. You may also be eligible for a special enrollment period (SEP) at any time of year if you experience a qualifying life event. Some qualifying life events include getting married, having a baby, or being offered a new health benefit by your employer.

Key features of individual health plans include:

Comprehensive benefits: Under the Affordable Care Act (ACA), marketplace plans must cover the 10 essential health benefits, including preventive care, prescription drug coverage, mental health services, and maternity and newborn services.
Tiers of coverage: Health plans are categorized into metal tiers, which reflect how you and the insurer share costs.
Premiums and out-of-pocket costs: Monthly premiums, deductibles, copayments, and coinsurance vary by health plan. Depending on your needs, you can choose a plan that balances lower monthly costs with higher out-of-pocket expenses or vice versa.
Provider networks: Each plan has a network of providers, hospitals, and clinics. Reviewing a plan’s network is important to ensure it includes your preferred doctors.

How group and individual insurance compare

If you’re new to individual coverage, let’s go over how it differs from group coverage.

	Individual insurance	Group insurance
Who purchases and owns the plan?	You.	Your employer.
Do you maintain coverage if you change jobs?	Yes. Since you bought the policy, it isn’t tied to your employment.	If you lose your job or face reduced hours, you might be eligible to continue coverage through COBRA for a limited time. If you quit, you can’t keep your group plan.
Do you get a choice in your plan?	Yes. You pick your own policy.	No. The employer picks the policy.
Does it work with pre-existing conditions?	Yes.	Yes.
Can you use premium tax credits?	Yes (if you don’t opt-in to a benefit like the ICHRA).	No. However, if your group plan is unaffordable, you may be eligible for tax credits if you enroll in an individual policy instead.

Individual health insurance plans and ICHRA

Most Americans have group health coverage rather than individual coverage¹ since employers commonly offer a group policy as part of their employee benefits package. However, the individual coverage HRA (ICHRA) is gaining popularity among employers due to its cost-effectiveness and adaptability.

An ICHRA allows employers to give employees tax-free money to help pay for individual health insurance. Instead of providing a one-size-fits-all group health plan, employers set an allowance, and employees choose the individual health coverage that works for them.

If your employer offers you an ICHRA:

You shop for and enroll in a qualified health plan. If your employer offers an ICHRA through Remodel Health, you benefit from a simplified shopping experience. You can easily compare your options for off-exchange health plans directly through your account.
You use your employer’s monthly contribution to cover the cost of your insurance premium. If your monthly premium costs more than your monthly allowance, you pay the difference.

This arrangement provides employees with more choice and flexibility while still receiving financial support through an employer-sponsored plan.

Here’s how an ICHRA benefits you:

More personalized options. Rather than getting lumped into a group policy that may not align with your specific healthcare needs, you have the freedom to find individual health insurance coverage that’s tailored to you.
Portability. Your individual health insurance policy is tied to you, not your employer. While you won’t have access to your ICHRA allowance if you switch jobs, you can keep your health plan as long as you continue paying the premium.
Reduced healthcare costs. It’s easier to afford your monthly health insurance premium with the tax-free contribution your employer provides.

Conclusion

Individual health insurance gives people the ability to choose coverage that meets their specific needs. With the growth of ICHRAs, more employees are entering the individual market for the first time and gaining greater control over their healthcare choices. By understanding what individual health insurance is and how it works with an ICHRA, you can make an informed decision when it’s time to pick your plan.