Individual Health Insurance Plans| Meaning, Costs and Benefits

Individual Health Insurance Plans – Life itself can be unpredictable and filled with uncertainties, therefore securing or having a robust Individual Health Policy is deemed a necessity and wise decision. Individual health insurance policy offers a lifeline of financial security and peace of mind.


This article delves into the multitude of benefits this form of insurance provides and why it’s a cornerstone of a healthy life.

What do you mean by Individual Health Insurance Plans?

Individual health policy is a coverage that the insured person purchases on their own to maintain their health and take care of medical care whenever required by the insured person. A medical insurance premium is required to be paid before claiming your coverage.

Individual health policy is a coverage that the insured person purchases on their own to maintain their health and take care of medical care whenever required by the insured person. A medical insurance premium is required to be paid before claiming your coverage.

Understanding Individual Health Insurance Plans

Before we explore its benefits, let’s understand what individual health insurance entails. This type of insurance is tailored to cover medical expenses incurred by an individual policyholder. Unlike family or group policies, individual health insurance is designed to cater specifically to the needs and preferences of a single insured person. Let’s look at the details of an Individual Health Insurance plan.

  1. Coverage: It covers the costs of medical treatments, hospital stays, doctor visits, surgeries, and tests.
  2. Customized: These plans are made for one person, so they can be tailored to fit their specific needs.
  3. Benefits: It gives you peace of mind knowing that if you get sick or hurt, your insurance will help pay for your medical bills.
  4. Cashless Hospitals: You can go to certain hospitals where you won’t have to pay upfront – the insurance company takes care of the bill directly.
  5. Emergency Support: It’s like a safety net during medical emergencies so you don’t have to worry about huge bills.
  6. No-Claim Rewards: If you don’t use your insurance in a year, you might get bonuses like more coverage or lower premiums.
  7. Easy Access: You can choose the hospital or doctor you prefer, making it convenient for you.
  8. Financial Security: It prevents you from spending all your savings on medical bills and helps you maintain your financial stability.
  9. Smart Investment: As healthcare costs go up, having this insurance is a smart way to protect your health and your wallet.

What are the benefits of Individual Health Insurance Plans?

Health benefits protect your employees from financial losses due to rising healthcare costs. Individual health insurance plans can cover a variety of expenses.

  • Ambulatory patient services (outpatient care that doesn’t involve being admitted to the hospital)
  • Emergency services
  • Hospitalization, such as surgery
  • Pregnancy, maternity, and newborn care services
  • Mental health services
  • Substance abuse disorder services
  • Prescription drugs
  • Rehabilitative services
  • Facilitative services
  • Laboratory services
  • Preventive services
  • Pediatric services

Individual health insurance programs aren’t required to provide adult vision coverage or adult dental coverage, but they do include coverage for children’s dental and vision costs.

All marketplace plans must provide additional benefits such as birth control and breastfeeding coverage.

Advantages of individual health Insurance Plans

There are many advantages to individual health insurance policy over traditional group health insurance. We’ll cover the top five advantages in the following sections.

  1. Cost of individual health plans

Looking at the cost of group health insurance plans over the years, you’ll see that they’ve steadily risen. As group health insurance premiums get more expensive, it becomes more difficult for small- and medium-sized organizations to afford essential health benefits for their employees.

Not to mention the annual rate hikes that inevitably come once it’s time to renew your plan. On the other hand, individual policies are generally more affordable.

What’s more, by offering an HRA, you can give your employees a set monthly allowance to spend on their health insurance premiums and qualifying medical expenses, making it easy and consistent to budget for every month.

  1. Availability of discounts

Not only are individual insurance premiums more affordable to begin with, but employees can also qualify for additional financial assistance on their premiums.

These discounts, known as health insurance subsidies, or premium tax credits, were created to help low-income individuals get affordable health coverage through the health insurance marketplaces.

If you offer a group health insurance policy that your employees can’t afford, there are no subsidies available to help them make payments. That means their only option is to opt out of the coverage, leaving them uninsured and less likely to stay working at your organization.

It’s important to note that if you offer an HRA, your employee may need to coordinate their premium tax credit with their HRA allowance, or choose between the two, depending on the type of HRA you’re offering.

You can also offer a health stipend to your employees if you have workers who receive advance premium tax credits. However, employee stipends are taxable for employers and employees, making HRAs a better option for most organizations.

  1. Individuality

While most employees are thankful for the group health insurance plan their employer offers, they don’t get any say in what kind of plan they ultimately end up with. That means they’ll be lumped into a one-size-fits-all plan without any choice on their network, coinsurance, or premium cost.

By reimbursing your employees for their individual health insurance instead, they can choose a personalized plan that works with their current doctors, healthcare providers, and budget. If your employees need chronic disease management or special medical equipment, they can choose the plan that best fits their needs.

  1. Flexibility

Traditional group plans are full of strict requirements that can be hard for small and medium-sized business owners to meet. For example, many insurance companies require that a minimum number of employees be enrolled in the plan.

If you have employees who are on a spouse’s or parent’s plan, enrolled in Medicare, or simply don’t want the coverage, you may not meet the participation requirements, which means you can’t offer the plan to those who do want it.

Moreover, group health insurance plans also have minimum contribution requirements, typically mandating that employers cover at least 50% of employees’ premiums. If you can’t afford to cover that much, you won’t be able to offer the plan.

Reimbursing your employees for their health insurance policies keeps you from following these strict group requirements. This gives you the flexibility to contribute what you can afford and allows you to offer the benefit to any number of employees, depending on the plan you choose to set up.

  1. Portability

Unlike group health insurance, individual health insurance policies are entirely portable, meaning your employees can take their policy with them even after they leave your organization.

Reimbursing your employees for their health insurance with an HRA allows you to offer a formal health benefit that takes care of your employees while also empowering them to make their own healthcare decisions that aren’t dependent on their employment.


There are many advantages to offering reimbursement for employees’ health insurance plans instead of a group plan.

Offering a tax-free HRA to employees for their health insurance is an excellent way to contribute to your employees’ healthcare while empowering them to choose an individual plan that works for them.

If you want to offer personalized health benefits to your employees, PeopleKeep can help. Our HRA and employee stipend benefits administration software makes it easy to set up and manage your benefits in minutes each month.

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