Health · Chapter 13 · Classes of Health Insurance
Individual vs Group Health Contracts
Definition
Individual policies are contracts between an insured and the company: an application and evidence of insurability are typically required, options/benefit levels are selectable, and coverage starts on the policy's effective date. Group insurance is a contract between the insurer and the group (employers, associations, labor unions, credit unions) with standardized coverage; premiums reflect the group's risk via experience rating (large groups — the group's own claim history) or community rating (small groups — the surrounding community's risk).
In plain English
Individual = you're underwritten and choose options. Group = the sponsor holds the contract and everyone gets the standard package.
Exam tip
Group administrative costs are LOWER — one monthly bill per sponsor. Group insurers also face extra rules like COBRA — federal continuation of group coverage (employers with 20+ employees) for a limited period after qualifying events such as termination or reduced hours. Experience rating = LARGE groups · community rating = SMALL groups.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
Related terms