The answer is that it doesn't cost less ..if you don't csidnoer what the employer is paying.  That's why so many people think COBRA is expensive.  COBRA isn't expensive, it's just that when you continue your group plan under COBRA it's the same plan, at the same cost (plus maybe 2% for admin), but it seems expensive because your employer is no longer contributing.Individual plans ARE CHEAPER than group because you can be turned down.  In group plans nobody can be turned down, so the cost to cover all the health problems escalates.The biggest mistake people make is assuming that their work coverage is more competitive without shopping.  It's not uncommon, especially for young, health people, to be able to get cheaper plans on their own even when the employer is picking up half the cost.Finally, most small companies will just have their employees buy individual plans because it's a fraction of the cost .though either way it's always nicer when someone else is picking up the tab.