Group Health vs. Individual Health

[celiothrkn]

Let's say that two business owners started a company and are looking to buy health insurance for their respective families (each owner is married and have 1 child).

Is there an advantage to having them buy 1 group health plan through their company? As opposed to having each of them buy 2 health insurance policies as 2 families?

While the rates won't differ, if they go as a group through the business, then my thinking is that the business would be able to deduct the cost of health insurance as an expense. On the flip side, I don't think there is any sort of tax preferential treatment if they bought individually outside of employment unless they could get Obamacare subsidies, which in this case let's assume they don't qualify. Thoughts?

 

[Yagents]

Buy group and get ppo network. Vs aca HMO crap.

 

[Oanny76]

Individual Health

 

[Alexandra Goebel]

If you buy a group plan through your company, you can absolutely run it through as a business expense. Another viable option to consider are the HRAs, namely QSEHRA or ICHRA. These options allow you to determine a fixed-budget, medical "allowance" to run through your company that allows you, as an individual, to go to the marketplace, select a plan, and submit premium/deductible/medical expenses for reimbursement. The benefit is that it can be much more affordable than a group health plan for a small company and can counteract yearly renewal increases of traditional plans. HRAs can also sit in your back pocket ready for you to customize when you grow and bring on new hires.

Here is an article on ICHRA if you would like to learn more: ICHRA: The 2020 Massive Change to Healthcare

 

[Francisco Oller]

Group health plans typically work better when they are implemented within a large employer as the risk is spread throughout the workforce. In addition, you as a business owner have to consider that group health plans. and individual market plans have restrictions such as networks and coverage. An HRA has the added benefit that out-of-pocket medical expenses such as dental and vision are eligible for reimbursement. The ideal health insurance option depends on the business and its growth plans.

 

[leevena]

2 life group...too many variables to consider, both options have pros and cons. Get quotes for both, then make a decision. My gut tells me that Individual is the route to go if no other employees involved.

 

[yorkriver1]

Rates for comparable coverage in my state for ACA rule based small group tend to be at least 25% lower cost compared to plans with no tax credits that are ACA compliant.
Most of my clients who do this see the value in setting up HSA small group, and have come off high deductible individual ACA plans. $800/month down to $500 and put aside difference in HSA. Middle aged person in this example
Depending on the client I may mention limited benefit plans, but usually to help them understand what they may be offered if shopping for lower rates. Lightning vs lighting bug, which is fine, with clear understanding of what is not covered.