What Is An Individual Health Insurance Plan?
An individual health insurance plan is a plan mainly provided to self-employed and unemployed people. Occidentally, people will elect individual coverage even if their company provides a plan. "Individual" plans in the health insurance business do not actually refer to insurance provided to one person. It just means that a company or employer does not pay part of the bill. If someone pays the entire premium of a family plan, then such coverage is still considered as "individual". Rates for such individual plans will always be more expensive than group plans. The price of a group plan is lower because participating companies buy many plans from an insurance company (at cheaper bulk rate) and then the employee will pay part of the premium for employees.
Individual health plans and group market plans both offer the same type of options (for the most part). They offer health maintenance organization (HMO) plans, preferred provider organization (PPO), point-of-service (POS) plans and traditional fee-for-service arrangement. For those electing a group plan, they can receive a substantial discount on premiums and comprehensive policies. Keep in mind though that a group insurance plan will only cover someone while they are at the same job. If a consumer ends up in a situation without access to a group plan (ie laid off without other employment options), then they will quickly learn how expensive that the alternatives can be. Individual plans are usually only recommended to those people without the group plan option.
Disadvantages Of Individual Health Insurance Policies
Insurance companies might not cover people with such plans. This might be pretty scary for those with a family or those in need of serious healthcare. With individual health insurance, there is a requirement to submit an application that is medically underwritten by the insurer. This requires an insurer to examine a candidate's medical record. As with most other types of insurance (ie auto insurance), premium is established by risk. Depending on the risk, insurers can even choose not to offer someone a health insurance policy. Alternately, an insurer may require certain exceptions to be added to an insurance policy (mainly for those with health problems). Some states offer what is known as "guaranteed issue". This law forces insurance companies to provide an individual health plan to those needing one. This is great protection but will exceedly increase premiums.
Another temporary option for those leasing an employer with a group health insurance plan is what is called COBRA coverage. Cobra reiterates to Consolidated Omnibus Budget Reconciliation Act (established 1985). Many employers provide this coverage to employees for an additional 18 months after leaving the company. Such people will be forced to pay the full premium if they elect COBRA insurance coverage. Consumers have 60 days to determine if COBRA works for them. If it is not desirable, consumers should start shopping for individual health insurance coverage. COBRA insurance will cover all family members (even if there are pre-existing conditions). This might be a big advantage over some individual plans.
Tips For Finding An Individual Health Insurance Policy
- If you have some favorite physicians, check to see if they are included on an insurance company's network (ie PPO or HMO in-network).
- Determine if you want a comprehensive plan (covering numerous potential expenses) or if you want a catastrophic plan covering you in the event of very serious health issues.
- Do not always lean towards the cheapest policy. You need to find a policy that fits all of your personal needs.
- Evaluate all financial considerations including annual premium, deductible, co-payments, maximum out-of-pocket expenses and annual limits.
- Some group insurance plans give you the option of converting to an individual health plan. Although the conversion will cost more than a group plan, it is significantly less than buying an individual plan directly.
- If you have pre-existing conditions, most states require you to obtain some type of coverage within 63 days or such pre-existing conditions will not be eligible for coverage.
- Always check if your spouse has group plan options at her place of employment.
- There are other types of group plans offered such as through the AARP and other organizations.
Individual Health Insurance Final Thoughts
Consumers should educate themselves on the types of individual health insurance policies offered. The best place to look is the internet due to accessibility of options and comparison shopping. Insurance premiums can vary significantly from one insurer to the next. Regardless of any personal situation, consumers should always have health insurance to cover themselves in the event of a serious injury or illness. Most consumers do not adequately research all options. This is surprising considering that someone can be stuck with an undesirable policy for an extended period of time.