People starting their own companies, corporate cutbacks and other factors mean more people are buying individual health insurance. However, there is no getting around the high costs, steep deductibles, restrictions and confusion that comes when purchasing these health plans. Fortunately, there are ways to get the best coverage at the lowest price possible.
With employer-sponsored health plans, everyone is covered and at the same cost. With individual plans, most states still allow health insurers to refuse coverage for preexisting conditions, and the costs will vary greatly starting with healthy young males generally having the lowest premiums.
With this in mind and the fact that employee plans will guarantee renewability, it is almost always best to go with employee plans when they are available and stay with them as long as possible. Those changing jobs should remember that COBRA requires that employers with 20 or more workers allow those employees to keep their insurance for 18 months after they leave their jobs. Even though those ex-employee with have to pay the full premium (if the company was paying part before), this is still usually the best option.
Note that Patient Protection and Affordable Care Act (PPACA) will require that health insurance companies provide insurance regardless of preexisting conditions from 2014. In the meantime, most state have pools that provide coverage for high-risk individuals, but these are quite expensive.
Getting started buying individual health insurance
With the costs and importance of health insurance, the experts all recommend those in the market for it get started early. If at all possible, the hunt should start at least 60 days before the insurance is needed.
Being as complicated and important as it is, getting help when buying individual health insurance is a good move. Starting in 2014, PPACA will require that every state set up a health insurance exchange to help its residents find insurance.
Currently, one place to search for providers and advice includes ehealthinsurance. It may also be a good idea to use an agent to help cut through all the plans and confusion. While an independent agent (vs. a captive agent), should not be tied to any one company, it is still wise to be wary of any potential bias towards certain providers. National Association of Health Underwriters is one place to find out about agents and start searching for a local one.
The three basic principles
Before starting a search for individual health insurance, sit down and consider the following:
- What is needed: Obviously, a young man is not going to need maternity coverage while one with a pregnant wife will. Consider medical history and write down every type of coverage that is likely to be required.
- Affordability: As expensive as any plan appears to be, costs are only likely to rise. Make a budget and see how much is available for insurance. On the positive side, careful research can lower costs.
- Availability: Find out exactly what is available. Put some time and effort into doing careful research. Apart from the sites mentioned above, another good research resource is the Foundation for Health Coverage Education. It offers a quiz that helps narrow the search so people can find the most affordable health insurance options in their states. The customized profile this site provides after answering the quiz questions includes both the public and private options available.
Those who are part of a trade association will want to check with them to see if there is some kind of group coverage available. This will likely be cheaper.
Things to keep in mind when buying individual health insurance
Use the health insurance comparison guide when deciding on an insurance plan. People obviously need to make sure the plan will cover health issues they are likely to face. At the same time, they also should take steps to ensure they are not paying for what is not needed.
- With costs the way they are, most people need to look upon individual health insurance as primarily protection in emergencies and something that will save them from financial ruin in the case of health problems. Cut the frills and concentrate on getting as much core coverage as possible.
- Deductibles will certainly make a big difference on premiums, and it usually pays off over time to go with higher ones. Whenever available, use health insurance savings plans to cover these expenses.
- Prescription drugs are one of the most utilized parts of any health insurance so this part of the plan should be given extra scrutiny.
- Make sure the plan will pay for necessary coverage at local hospitals.
- Be aware of when and by how much rates can be raised.
When filling out the application, be very accurate and honest. Remember that states allow insurance companies to look back on the applicant’s medical history for preexisting conditions. The length of time allowed varies with the state as will the amount of time an insurance company can refute to cover a preexisting condition (an exclusionary waiting period). The Health Care Coverage Options Database provides information for each state.
Heathcare.gov also has a lot of information on health insurance.