Group vs individual health insurance in Canada: how they differ and which to choose

Group health insurance is a plan your employer, union or association buys for everyone in the group; individual health insurance is a plan you buy for yourself and your family. Group plans usually accept every eligible member without medical questions, have higher annual maximums and are partly or fully paid by the employer, so they are almost always better value when you can get one. Individual plans are what you use when you have no group access: when self-employed, between jobs, retired, or working for a small employer with no benefits. The key trade-offs are underwriting, maximums and portability. This guide compares them line by line.

It is part of the private health insurance in Canada overview. Examples are illustrative.

Side-by-side comparison

Feature	Group plan	Individual plan
Who buys it	Employer, union, professional association	You
Medical questions	Usually none for regular enrolment; late applicants may need evidence of insurability	None for guaranteed-issue plans; a health questionnaire for underwritten plans
Pre-existing conditions	Usually covered	Often excluded or limited in underwritten plans; guaranteed-issue plans cap drug benefits instead
Premium	Shared by employer and employee, set by the group's experience	Set by age band, province, plan level and family size
Drug coverage	Often 80% to 100%, sometimes with a pay-direct card and high or no annual maximum	Commonly lower annual drug maximums, especially in basic and guaranteed-issue plans
Dental	Basic and often major; orthodontics in richer plans	Basic dental is common; major dental often has a waiting period and low maximums
Portability	Ends when employment ends, with possible conversion rights	Stays with you as long as you pay premiums
Tax	Employer contributions are not a taxable benefit federally; they are taxable for Quebec income tax	Premiums you pay are eligible for the medical expense tax credit; self-employed may deduct them

How group plans work

Most employer plans in Canada are run by a large insurer or a third-party administrator. Common features:

Eligibility waiting period for new employees, often up to three months.
Dependants covered: spouse and children, usually to 21, or to 25 if a full-time student; disabled children often longer.
Flexible plans that let you choose a tier each year or add a health spending account.
Late enrolment rules. If you decline coverage and join later, the insurer may ask for medical evidence or restrict benefits for a time.
Opting out of health and dental is often allowed if you are covered under a spouse's plan. In Quebec, opting out of the drug portion is only possible if you are covered by another private group plan, because drug coverage is compulsory.

Employer-paid group premiums for health and dental are not a taxable benefit for federal income tax. Quebec is different: the employer's contribution to a private health services plan is added to your Quebec taxable income. Your share of the premium, deducted from pay, is an eligible medical expense for the tax credit on both returns.

How individual plans work

Individual plans come in two forms:

Guaranteed issue. No medical questions. Offered as basic plans to anyone and as conversion plans to people leaving a group plan, if they apply within the insurer's deadline, often 60 or 90 days after group coverage ends. The trade-off is lower maximums, for example a drug benefit capped at a modest amount per year.
Medically underwritten. You answer a health questionnaire. The insurer may accept you, decline you, or exclude specific conditions. Benefits and maximums are usually better.

Individual premiums depend on age band, province, plan level and number of people covered, and they normally rise as you move into older age bands. See individual health insurance cost factors.

Worked example: same family, two routes

A family of four in Manitoba (illustrative figures):

Group route. The employer plan costs $520 a month for family coverage; the employer pays 70% and the employee pays 30%, or $156 a month ($1,872 a year) by payroll deduction. Coverage: 90% drugs with no annual maximum, 80% basic dental to $1,500 per person, 80% paramedical to $1,000 per practitioner.

Individual route. An underwritten family plan with similar but lower benefits costs $330 a month ($3,960 a year). Drugs are covered at 80% to $2,500 a year per family, dental at 70% to $750 per person after a waiting period for major work.

With yearly expenses of $5,000 (drugs $1,200, dental $2,800, physio $1,000):

Group plan pays: $1,080 drugs + $2,240 dental + $800 physio = $4,120. Net cost to family = $1,872 + ($5,000 - $4,120) = $2,752.
Individual plan pays (assuming 80% physio to $500 per practitioner): $960 drugs + $1,960 dental + $500 physio = $3,420. Net cost = $3,960 + $1,580 = $5,540.

The group plan is about $2,800 cheaper in this year, mostly because the employer pays most of the premium. Try your own plans in the plan comparison tool.

When an individual plan still makes sense alongside a group plan

Your group plan has no dental or a very low drug maximum and you have known high costs.
You want coverage that stays with you because you expect to leave the job, and you can pass underwriting now while healthy.
Your spouse's group plan already covers you, and an individual plan would only duplicate it. Here the answer is usually no; see coordination of benefits.

Quebec differences

Quebec's Act respecting prescription drug insurance makes drug coverage mandatory. If your employer's group plan includes drug insurance and you are eligible, you must join and cover your spouse and children unless they are covered by another group plan. You cannot choose the RAMQ public plan instead. Read Quebec's mandatory drug insurance before declining any group coverage in Quebec.

Mistakes to avoid

Missing the conversion deadline when leaving a job. Once it passes, you may face a health questionnaire. See losing group benefits.
Declining group coverage to save the payroll deduction and then needing it later, when late-enrolment rules apply.
Comparing premiums only. A lower individual premium with a $750 drug cap may cost far more in a bad year.
Not updating dependants after a birth, marriage or a child leaving school; most plans set deadlines, often 31 days.

When to get advice

If you have a medical condition and are moving from group to individual coverage, a licensed life and health insurance advisor can compare conversion and underwritten options. Ask for any exclusions in writing before you cancel anything.

Frequently asked questions

Can my employer cancel my health benefits?

An employer can change or end a benefits plan, subject to employment contracts, collective agreements and provincial employment standards. Check your employment agreement and plan booklet, and ask human resources for written notice of changes.

Is a group plan through an association the same as an employer plan?

Association plans (for professionals, alumni or business owners) are group contracts, but they may require medical questions and do not get employer contributions. Compare them like individual plans.

Can I keep my group plan after retirement?

Some employers offer retiree benefits; many do not. If not, the insurer may offer a conversion plan if you apply within its deadline.

Sources

Canadian Life and Health Insurance Association — guides to group and individual health insurance
Canada Revenue Agency — private health services plans and the medical expense tax credit
Revenu Québec — taxable benefit for employer health plan contributions
Régie de l'assurance maladie du Québec — obligation to join a private group drug plan
Financial Services Regulatory Authority of Ontario — licensing of insurance agents in Ontario