Although most Americans with Health insurance are covered under an employer's plan, there are still many employers that don't have Health insurance offerings. Workers of companies not offering insurance are left to find and purchase their own Individual Health Insurance directly from an insurer.
There are actually several advantages to purchasing private individual health insurance:
Advantages
- Unlike those covered under an employer's plan, you won't just have a limited number of plans that were pre-selected by someone else to choose from. You, instead of your employer, get to determine what plan features are desirable and pick the plan that you see fit. By having a variety of plans available to you, such as those that don't cover services you don't want and that have higher deductibles, you can take advantage of lower premiums.
- Since private health plans are under your control, not your employer's control, you also won't have to worry about losing your coverage if you ever want to change jobs. As long as you pay your premiums when they're due, the coverage is yours to keep and the insurer can't drop you.
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However, there are also several disadvantages to private health plan coverage, for example:
Disadvantages
- Even if paying the same premium rates, individual plans usually provide less coverage than employer plans because individual policies have a larger percentage of the premium dollars going toward paying operational costs.
- The premiums for private health insurance plans increase as you age in most states. Since renewal rates tend to be higher than new policy rates, you can avoid the rate hikes for awhile by changing plans as rates become higher. However, this isn't a long-term solution. Eventually, your age will make it more difficult to find an insurer and your individual policy will become more expensive.
- Group plans are typically required to insure all employees and their family members. On the other hand, if an applicant of an individual plan doesn't have an ideal health status, then the insurer can reject the applicant.
You will also want to keep a few questions in mind to ask your agent as you compare plans:
Questions to ask
- What are the plan's monthly premiums, coinsurance, and deductibles?
- What benefits does the plan offer?
- What pre-existing conditions affect my coverage?
- Is the doctor or hospital I want to use covered under the plan?
- If I use out-of-network providers, will there be additional fees or charges?
- How does the referral system operate?
- How is care handled should I need medical services when I'm away from home?
- Does the plan have a maximum amount it will pay over my lifetime or per year?
In closing, purchasing private market insurance isn't as complicated as it might seem, but getting the right policy will take a little effort on your part. Remember to approach it just as you would any other major purchase - research all your options, do price and benefit comparisons, and seek expert advice and assistance.
For additional information on comparing plan choices and features, see Understanding Health Insurance Options.
Frequently Asked Questions
Can I keep my individual policy if I change jobs?
Yes. Individual policies are owned by the policyholder, so as long as you continue to pay premiums, the coverage remains in force regardless of employment changes.
Will an insurer deny me coverage for a pre-existing condition?
Insurers can consider health status for individual policies, and in some cases may limit coverage or decline an application, depending on state rules and the specific policy.
How can I lower my individual plan premiums?
Choosing higher deductibles, limiting covered services, or selecting plans with narrower provider networks can reduce premiums, but these choices may increase out-of-pocket costs.
Is provider choice the same in individual plans as employer plans?
Not always; some individual plans have smaller networks, so confirm that your preferred doctors and hospitals are covered before enrolling.