Individual / Group Health Insurance
There’s strength in numbers, particularly when you’re buying health insurance. As part of a group plan at work, you can generally lower premiums — but sometimes a group health plan may not be an option.
If you leave your job — or start another one that doesn’t offer health insurance — you may be surprised at just how expensive the same coverage is when you buy individual health insurance.
An individual plan is one purchased on the private market, not tied to workplace benefits. Although they are called “individual” plans, they can cover you, your spouse and your children.
Health plans that cover children cannot deny or limit coverage for youngsters under age 19 because of a health condition. This provision of the federal Patient Protection and Affordable Care Act went into effect in September 2010. Starting in 2014, the rule will be extended to everyone.
For now, though, there is no guarantee that an insurer will accept an adult for an individual policy in most states. Individual plans are medically underwritten and the insurer may reject your application or attach exclusions to the policy if you have health problems. Under “guaranteed issue” laws, some states don’t allow this practice and require that health insurers offer you a policy, no matter what medical problems you have. The Kaiser Family Foundation has a list of guaranteed issue laws.
People enrolled in individual plans pay premiums determined primarily by their expected health care costs, so prices will be higher for those who are older and/or less healthy.
The cost of individual health plans
Pricing is probably the most bewildering aspect of individual health plans, so it’s worth your time to shop around for health insurance quotes. For instance, premiums for similar products from different insurers can vary by as much as 50 percent for the same person.
Don’t let confusion tempt you to go without coverage. You might be healthy today, but develop a serious illness or suffer an injury tomorrow, which could lead to financial disaster if you’re uninsured. Sixty-two percent of bankruptcies are related to medical bills, according to a 2009 study in the American Journal of Medicine. Plus, you’ll lose your rights to group health coverage of pre-existing conditions if you go without insurance for 63 days or more, a time period set by the Health Insurance Portability and Accountability Act (HIPAA).
How to choose an individual health insurance plan
Ask yourself these key questions:
- Are my family’s doctors in the plan’s network? You pay more to visit health care providers outside the plan’s network, so look for a plan with a robust network of primary care physicians, specialists and hospitals.
- What are my family’s health care needs? Consider the services you and your family will need on a regular basis. If your child has asthma, will he have to see an asthma specialist routinely to keep it under control?
- What will be my out-of-pocket expenses and monthly premiums? Out-of-pocket costs include the deductible, copays for office and emergency room visits and co-insurance. Generally the lower the out-of-pocket costs are, the higher the premium is. Paying a much higher premium just to get a low copay doesn’t make sense if you go to the doctor only a couple of times a year. However, choosing the plan with the lowest premium is unwise if you can’t afford to pay the out-of-pocket costs when you get sick. To estimate health plan costs, try this health care insurance cost calculator from Money-Zine.com.
- Does the plan cover prescriptions and X-rays? Not all individual health plans cover prescription drugs, one of the most frequently used benefits. Review the terms of coverage to determine if your current prescriptions are covered and at what level. X-rays are a routine part of some treatments, so make sure they are covered in each plan you consider.
- Do I prefer certain specialists? Some plans limit the types of providers you can see. If you want to visit an acupuncturist or chiropractor, be sure to ask your insurance agent about coverage for these services. Psychotherapy and other mental health services will likely have specific limitations as well.
- How can I save money on the premium? One way is to look for a high-deductible health plan with a tax-advantaged health savings account (HSA). The HSA lets you save pre-tax money for out-of-pocket medical expenses, such as the deductible and medical care not covered by the health plan. Unused money rolls over from one year to the next, and you keep the account, even if you change health plans. Most high-deductible plans today cover the full scope of health care services and, under the Patient Protection Act, must fully cover preventive care.
- What will it cost me for emergency care? Read the policy’s fine print about coverage for emergency care and hospital stays. Compare costs for copayments and co-insurance and how those costs and services, such as surgery care, apply toward the deductible.
Individual coverage at a group rate
In some states, you can buy health insurance as a “group of one” if you are a self-employed sole proprietor and can show that you’ve been in business for at least 30 days. The opportunity is available even if you work out of your home. The Kaiser Family Foundation has a list of states where you can buy guaranteed issue “group of one” health plans.
If you live in a state that does not offer “group of one” insurance policies, you might still qualify for a group rate if you own a business and have at least one partner or employee. Does your spouse do some bookkeeping for your company? That’s a two-person business, eligible for a group rate and a group policy.
Leaving a job that had health benefits? Consider these options:
- Check whether you can be added to a spouse’s health plan, if your spouse has coverage at work. Most employer-sponsored health plans extend coverage to spouses and children.
- Consider continuing coverage through your employer’s group plan. Under the Consolidated Omnibus Budget Reconciliation Act – COBRA – you can continue coverage for up to 18 months if your employer has at least 20 workers. However, you have to pay the entire premium, which might give you sticker shock if your employer has been paying most of the tab. Some states have their own “mini-COBRA” laws applying to employers with fewer than 20 workers. Know your COBRA rights.
- Unless the employer is self-insured, you might be able to convert the group coverage to an individual health plan. Ask the insurer for details. The rate will be higher than the group plan’s rate, but it’s one way to secure health insurance if you have medical conditions.