Basic Information Concerning Individual Health Care
- INDIVIDUAL HEALTH INSURANCE
- FEE-FOR-SERVICE INSURANCE
- MANAGED CARE PLANS
- OPEN ENROLLMENT IN MANAGED CARE PLANS
- ASSOCIATION-BASED HEALTH INSURANCE
- HIGH-RISK POOLS
- WHAT TO KNOW
- CAN I KEEP MY DOCTORS?
- ARE MY PRESCRIPTIONS COVERED?
- CAN I COVER MY DEPENDENTS?
- GETTING STARTED
- PLANNING FOR COSTS
- NON-COMPREHENSIVE POLICIES
- NO GUARANTEES
- CHALLENGING FACTORS FOR 50+
INDIVIDUAL HEALTH INSURANCE
Individual health insurance is exactly what it sounds like – coverage you purchase on your own, directly from an insurance company or insurance agent – as opposed to group insurance, which you typically receive through your employer. If you are 65 or older, you can also purchase individual insurance from private companies to help pay for some of the costs Medicare does not cover. These plans are usually called Medicare Supplement plans and you can read about those in our Medicare section.
There are many reasons someone under the age of 65 might need to purchase their own health insurance. Your employer might not provide health coverage, or you might be an early retiree, self-employed, or transitioning from COBRA. Individual Major Medical Health Insurance is available to help protect you and your family against health care costs and provides you access to care. You pay the entire premium each month; no employer makes any contributions. It is important to know that coverage is not guaranteed and the limitations around eligibility may vary.
A Fee-for-Service Insurance policy (also called indemnity insurance) is a traditional kind of health insurance. It partially pays for each medical service you get, such as doctor visits or hospital stays. You’re responsible for the remainder of the cost. The insurer calculates the amount they cover in one of two ways – by covering a percentage of the approved amount for the service (insurers maintain a list of what they think each service should cost, which can differ from what they actually cost), or a fixed amount. In the case of a fixed amount (also known as a fixed cash benefit), the insurer covers a fixed amount per service – $50 for a doctor visit, for example- even if the medical service costs you more.
One advantage of fee-for-service plans is that you can go to any doctor or hospital you choose. However, you usually pay a higher monthly cost for your medical care than you would as part of a managed care plan.
MANAGED CARE PLANS
It’s common to receive health insurance through a managed care plan, such as a Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO).
- In managed care plans, health insurance companies contract with doctors and hospitals to provide health care to its members. These doctors and hospitals make up the plan’s network.
- In managed care plans, you may be limited to the doctors and hospitals that are part of the plan’s network. Some plans, like PPOs, allow you to use doctors and hospitals outside the plan network, but you probably pay more.
- In HMOs, your visits to the doctor are pre-paid by the plan and you’re only responsible for a small copayment each time you visit the doctor.
OPEN ENROLLMENT IN MANAGED CARE PLANS
Some states require managed care plans to have an “open enrollment” period each year. Open enrollment is commonly a one-month period during which managed care plans must let people join, even if they have an ongoing, serious medical problem. This is a good option if you have not been able to get health insurance because of a pre-existing condition – you can sign up for a managed care plan during an open enrollment period without needing medical exams for approval.
ASSOCIATION-BASED HEALTH INSURANCE
Many professional, community and religious organizations offer their members health insurance coverage at group rates. If you are a member of any trade or professional association, ask if it offers health insurance coverage. This option may offer lower premiums than plans you purchase directly from a private insurer, but check the coverage and other out-of-pocket costs carefully to truly compare.
In some states, high-risk pools are a source of health insurance for people who have not been able to get health insurance because of a pre-existing condition. Generally speaking, risk pools are state-sponsored, nonprofit associations. A risk pool is a temporary stopping point for individuals who are denied health coverage – or for individuals who need to fill a gap in insurance coverage. They are usually considered a last resort because premiums charged to policyholders are generally higher than rates for comparable policies in the marketplace. (For more information on any of these terms, please visit the Heath Insurance Terms Glossary link on this page.)
WHAT TO KNOW
When purchasing something as important as health insurance, it’s a good idea to create a list of questions to ask about each of the choices available to you. Here are a few things to consider:
CAN I KEEP MY DOCTORS?
This is one of the first questions many people ask when looking at health plan options. The answer to the question depends on which type of individual health insurance you choose. If you select a Health Maintenance Organization (HMO), you are required to receive care from within the plan’s network, so check to see if your doctor is in that plan’s network. If your doctor is a specialist, most HMO plans require that you first see a primary care physician for a referral.
Like HMOs, Preferred Provider Organization (PPO) plans have provider networks, but unlike HMOs, PPOs also let you visit any doctor or hospital you choose, without a referral. Keep in mind that you’ll pay less out of your own pocket if you see doctors and hospitals in the insurer’s participating network, but if any of your doctors are outside the network you can still see them under a PPO plan. It’s helpful to choose an insurer with a large, nationwide network of doctors and hospitals, since it increases the chances that your doctor is in the network.
ARE MY PRESCRIPTIONS COVERED?
Many insurance companies offer a choice of major medical plans, some with prescription coverage and some without. Comprehensive individual health insurance usually covers your prescriptions, after a deductible. Be sure to check how a plan covers preferred, non-preferred, and generic prescription drugs, because plan details may differ. If you have a regular list of prescriptions, you may want to do some research into the plan’s formulary. A formulary is a list of drugs covered by the plan, and should tell you what your cost for each will be.
CAN I COVER MY DEPENDENTS?
Some individual health insurance allows you to add a dependent spouse and children or grandchildren to your policy – even if no other family member enrolls. Unlike employer-based plans, individual insurance requires each family member to go through separate “medical underwriting,” which evaluates the costs of insuring the added members and determines eligibility for coverage. Also, some plans may offer “Child Only” coverage. Be sure to ask about eligibility requirements, which can include criteria such as age, marital status, adoption status, legal guardianship or family relationship.
Before you purchase anything, it’s a good idea to shop around and compare individual health insurance policies and plans. A first step could be to decide how much you can afford to pay. With a figure in mind, you can look for health insurance that will give you the best health coverage for you and your family at that price.
There are a few ways to proceed. Before ultimately selecting an individual health insurance plan, it’s in your best interest to compare plans from several health insurance carriers to be sure that you are selecting the policy that will best fit your needs and budget. Web-based tools and applications are an easy way to determine coverage and cost, and they eliminate the need to call around to multiple companies and agents.
However, if you have a lot of questions or prefer to speak to someone about your choices, a licensed agent can help you sort out all the details of a health insurance plan – and help you with the application process. AMAC encourages its members to shop around and speak with multiple agents before making a decision.
PLANNING FOR COSTS
When researching individual health insurance, you should be realistic about the costs balanced against the importance of good coverage. Think of health insurance as an investment in your health and your family’s health.
Premium rates for individual policies vary widely, depending on state rules, the type of coverage included, and the applicant’s age and health. Unlike coverage provided through an employer, in which all applicants are accepted, insurers can reject applicants for individual coverage in most states if they have medical problems (a.k.a. a pre-existing health condition).
When you apply, an insurance company will look at your health history, the number of medications you take, and other health aspects to determine your eligibility for coverage.
One way to keep premiums manageable is to increase your deductible. Another is to look for a plan that just covers the basics – medical, hospital, and prescription drugs. Some benefits, such as coverage for dental, vision, and hearing care, may be more important to you than others, and you’ll want to keep them even if it means a higher premium. In many cases, you can pick and choose.
There are types of insurance policies that should not be mistaken for comprehensive health insurance. Specific Disease policies, such as cancer policies, pay only for care of a specific disease. Hospital Indemnity policies pay you a set amount of money for each day you are in the hospital. These policies may sound good but do not really cover all your health care costs. Research these kinds of plans very carefully to determine exactly what coverage you’ll be getting.
Unlike an employer’s plan, you are not guaranteed coverage with individual health insurance. Based on your current and past health, it’s possible to be declined, or offered coverage at a higher premium.
On your application, you’ll need to submit medical information that passes through the insurer’s “medical underwriting” process, which evaluates the costs of insuring you and determines if you’re eligible for coverage. You might be accepted, denied or accepted with a “pre-existing condition” waiting period. A pre-existing condition waiting period is the amount of time a new plan requires before it starts paying benefits related to a specific illness or condition. You may receive coverage at a higher-than-quoted rate due to pre-existing medical conditions. If you are declined coverage, you may be federally eligible under the Health Insurance Portability and Accountability Act (HIPAA) for a special plan that guarantees you will be accepted under your state’s laws and regulations.
For most people, group health insurance is a better choice than individual health insurance. Group insurance usually costs less and offers more benefits. However, some people can’t get group health insurance because they are self-employed, work for a company that doesn’t offer group insurance, have run out of COBRA benefits, or for some other reason.
CHALLENGING FACTORS FOR 50+
Many insurance companies offer health insurance plans to individuals. However, if you’re over 50 years old, there can be challenges to getting coverage:
- It might be difficult to find a company that will sell you a health insurance policy, especially if you have a serious medical problem.
- You might have to get a medical exam to prove you don’t have a serious medical problem.
- Individual insurance usually costs more than group insurance.
- You might get fewer benefits than with group insurance.
That is why AMAC is providing its members with access to your exclusive Personal Insurance Advisor. While it’s true that group health insurance usually offers better value than individual health insurance – it’s still far better than going uninsured. Individual policies accomplish the important goal of protecting you and your family against the uncertainty of big medical bills. Call AMAC today to find out how we can help!