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:
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:
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:
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. |
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:
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:
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.