Individual health insurance is different from group insurance. Group insurance usually refers to the health insurance you receive as an employee from an employer. In this situation, you are part of a group and certificates are issued to each member.
Group policies are usually less expensive than individual ones for two reasons:
- They are often subsidized to a certain degree by the employer
- They cost less for the insurer to issue
Although the costs for individual health insurance are greater, you can usually find similar coverage if you are self-employed and need health insurance. Overall, the plans are called managed care plans. Following are the most common ones:
Health Maintenance Organizations (HMOs): HMOs are a network of doctors, provider clinics, hospitals, and specialists. All the care you need resides in the network. HMOs require that you sign up with a doctor as your primary care physician. If that doctor cannot treat you, he or she will refer you to a specialist within the network. That is how the costs are managed.
Preferred Provider Organizations (PPOs): The PPO also has a network. However, you do not have to obtain a primary care physician from there. You can select any doctors you want. However, it may cost you additional money if you go outside the network.
Health Savings Plans (HSAs): There are two parts you can access with HSA coverage. One is a high-deductible plan and the other is a health savings account. The deductible plan provides basic catastrophic coverage. The HSA operates as a tax-free savings account. You pay for routine medical expenses from this account.
Fee for Service (FFS) or Point of Service (POS) plans: This is a simple plan. You pay for and receive the care you need. Then you are reimbursed for a percentage of the cost.
Those are the four major health plans you can purchase as an individual consumer. There are many other factors to consider when you are researching one of these plans.
Deductible: You will pay a deductible. This is part of the insurance coverage that you must pay before the insurance company kicks in their portion. For example, you might have a family deductible of $2,500 that you have to pay.
Copayments: A copayment is an amount you pay at the point of service. It is usually a small amount. For example, you might pay $30 for each doctor’s visit. But you will not be billed for anything else. The plan will cover the rest of the costs.
Coinsurance: Coinsurance is similar to a copayment. However, it is expressed as a percentage of the medical bill. For example, if you have a coinsurance rate of 80/20, you will have to pay for 20% of the medical bill.
Advantages of an Individual Health Plan
With an employer-sponsored or other type of group plan, you will have the same coverage as anyone else in the group, no matter what the state of your health is. You might be paying for coverage you do not use or the plan may not provide the coverage you need.
Another advantage is that an individual health plan is mobile. That means if you switch jobs you will never be without health insurance coverage.
How to Choose
Many factors need to considered when you are selecting an individual health plan.
- Costs: The costs of all of the plans detailed above can vary widely. You have to carefully compare them to make sure you receive the best dollar value for your payment.
- Health: If you are in good health, you may opt for an inexpensive plan like an HSA. There you are covered for any catastrophe (a grave illness or accident) but can pay everyday medical expenses with tax-free money.
- Doctors: If you have been using the same doctor and medical team for years and want to maintain those relationships, you might want to select a PPO for the increased flexibility.
- Risk: How do you feel about health overall? Are you more comfortable with a group that can take care of your every health need with the least amount of hassle and red tape? If you do not care about which medical health professional you use, an HMO might be a good choice for you.
Where to Choose
An independent insurance agent who has access to many insurance companies is the best choice for you in obtaining an individual health insurance plan. You can find them by applying for quotes on plans online.