A common misconception about health insurance is a group insurance policy costs less than a similar individual plan.  Group insurance is generally more rather than less expensive for the following reasons:

Initial Cost: Because the employer typically pays a portion of the employee’s premium (from 25-100%), many believe that group insurance costs less than an individual plan.  While the net cost to the employee may be less than a plan they can find on their own, the actual cost is almost always higher.

Since the passing of the Health Insurance Portability Act, group plans are now required to offer coverage to every member regardless of health. An employee with HIV or terminal illness must be accepted just as any healthy employee. Due to this requirement, the only real option for the insurance company is to charge more for coverage.  This tends to penalize the healthy employee - they pay more to offset the cost of the unhealthy employee.

Renewal Costs: Once a group plan is in force, the insurance carrier no longer has the option to reunderwrite the risk. If a business’s employee develops a severe medical condition, the carrier will not know about it until they present themselves for treatment.  To cover this exposure, almost every carrier will charge more in subsequent policy years. Even if no claims are submitted by anyone in the group, the insurance company will charge more for the renewal premium.