Start with what your employer actually pays
The number on your pay stub is your share, not the plan's cost. Ask HR for the total monthly premium and the employer contribution for both employee-only and family tiers. Those two figures decide most of this.
Many employers pay a generous share for the employee and a much smaller share for dependents. That is why so many families discover their employee-only coverage is a bargain while the family tier is not.
Once you have the numbers, the comparison is straightforward: your out-of-pocket payroll cost for the group plan versus the full premium of a private plan, adjusted for the deductible, network and benefits on each side.
How the two compare
Employer group coverage and privately purchased underwritten coverage differ in more than price.
| Employer group plan | Private underwritten plan | |
|---|---|---|
| Who pays | Employer pays a share, you pay the rest | You pay the whole premium |
| Health questions | None for the employee | Yes — full health history |
| Can you be declined? | No | Yes, or offered with an exclusion or higher rate |
| When you can join | Hire date, annual open enrollment or a qualifying event | Generally any month of the year |
| Portability | Ends when the job ends | Follows you between jobs; a move can change what is available to you |
| Plan choice | Whatever the employer selected | You choose from the carriers, deductibles and networks available in your state |
| Network | Set by the employer's plan | Often a national PPO on the plans we place, depending on the plan and state |
| Covering a spouse or children | Often expensive at the dependent tier | Priced by household band rather than per dependent on many plans, depending on the plan |
Availability, benefits, limitations, exclusions and rates vary by state and are confirmed at application.
When leaving a group plan makes sense
There are a handful of situations where private coverage clearly deserves a look.
- The employer contributes little or nothing, which is common at very small employers and for part-time roles.
- The dependent tier is the problem. Sometimes the employee stays on the group plan and the family goes elsewhere — that split is worth pricing.
- You are leaving the job to go self-employed, contract or start a business.
- The group network does not include your doctors, or is built around one local health system you do not use.
- You want coverage that follows you rather than restarting every time you change employers.
When staying put is the better call
Just as plainly, do not drop group coverage if any of these are true.
- The employer pays a large share of your premium. That is money you cannot replicate.
- You or a family member has a significant health condition. Underwritten plans ask health questions and can decline, exclude or rate up; group coverage cannot.
- You are pregnant or planning a pregnancy soon. Maternity is present on some private plans and absent from others entirely.
- You take an expensive specialty medication and the group formulary covers it well.
- You would qualify for a large subsidy on the ACA exchange if you left — in that case the exchange, not private coverage, is usually the better alternative. See private health vs ACA.
The spousal coverage question
When both spouses are offered coverage at work, running two employee-only plans is often cheaper than one family plan — and sometimes it is not. Price all three combinations before assuming.
A second common pattern: one spouse's employer covers the employee generously but charges heavily for dependents. Splitting the household across two plans is legitimate and sometimes considerably cheaper.
Watch two details. Deductibles do not combine across separate plans, so a split household may face two deductibles in a bad year. And some employers apply a surcharge when a spouse declines coverage they were offered elsewhere.
The COBRA decision window
When group coverage ends, you are typically offered COBRA — continuing the same plan, now paying the full premium plus an administrative charge. It is the same doctors, the same deductible and the same drug coverage, which is exactly why it can be worth it and exactly why it is expensive.
COBRA elections operate on a fixed window with a deadline, and there is normally a retroactive element: coverage can be backdated to the day the group plan ended if you elect and pay within the window. Your COBRA notice states your own dates — read it, and do not rely on a general description of the rules.
The practical approach is to price your alternatives during that window rather than after it. Losing job-based coverage is also a qualifying life event for the ACA exchange, which opens a special enrollment period, and private underwritten coverage can generally be applied for in any month.
- Read the COBRA notice and write down every deadline it gives you.
- Get the real COBRA monthly cost for your household tier.
- Price your exchange options, including any subsidy, during the special enrollment period.
- Price private underwritten options for your state, age and health history.
- Do not cancel or decline anything until the replacement policy is approved and issued.
What happens to your group plan when you go independent
Group coverage ends on a date set by the plan — often your last day, often the end of that month. Confirm the exact date in writing, because a gap of even a week is a real gap.
Any deductible and out-of-pocket amounts you have accumulated do not transfer to a new plan. Leaving in November after meeting a deductible is a very different decision from leaving in January.
Underwriting takes time. If you know your last day, start the private application early enough that a decision — including any request for records — lands before your group coverage ends. See private health insurance eligibility for what carriers ask.
If you are self-employed, there may be tax treatment available for health insurance premiums. We are not tax advisors and will not give tax advice — ask your tax advisor how it applies to your situation.