Individual Health Insurance
According to government statistics published in September 2019, nearly 12.8 million Americans buy individual health insurance policies because they cannot get group coverage where they work, or do not qualify for federal programs such as Medicaid or Medicare.
That's bad news for these consumers, because individual health insurance policies are generally more expensive than group plans. The cost to administer an individual plan is costlier and those overheads are passed on to the policyholder.
In this article, we're going to discuss what consumers can expect to find when it comes to individual health insurance plans. That discussion will include the types of plans offered, as well as some questions to ask when choosing a health care plan.
Finding Individual Health Insurance Plans
When purchasing health insurance, an individual can have difficulty finding coverage if they have a preexisting medical condition. Even factors such as geographic location and age make finding coverage difficult. This can happen because some states do not require insurance companies to accept all policy applicants. Research has shown that 90% of the time, a person with a preexisting medical condition is unable to find the health care coverage they are looking for in a policy.
When employers don't offer group health insurance, comparison shopping is the only way to get the best possible price and / or value from a policy. Most individual health plans do not offer the broad range of benefits found in group plans, and costs can vary a great deal from company to company. Here is a quick checklist of things to consider.
When shopping for individual health insurance, there are three basic options:
- Comprehensive / Traditional / Fee for Service Plans
- Health Maintenance Organizations
- Preferred Provider / Point of Service Plans
We'll explain the differences between each of these policy types in the sections below.
Traditional or Fee for Service Policy
Traditional / comprehensive / fee-for-service / indemnity insurance policies offer individuals the most choices of doctors and hospitals. Participants will usually be charged a monthly fee or premium for the policy and are responsible for a deductible, which ranges from $250 to $1,500.After the deductible is paid or satisfied, there will be a coinsurance arrangement with the insurance company. This means they will share in the cost of care; after the deductible is paid. Typically, the insurance company will pay 80% of medical and health care expenses. This type of insurance policy offers the most flexibility, but at a higher cost.
Health Maintenance Organizations
The way a Health Maintenance Organization, or HMO, policy works is very similar to a prepaid health insurance plan. The individual pays a monthly premium and in exchange, the HMO provides for doctor visits, hospital care, surgery, and other comprehensive medical services.
There is usually a nominal copayment due and paid at the time of each service; around $15 to $25 for a visit to the doctor's office. Members present their insurance card during the appointment, and there is very little paperwork to fill out after the visit.
HMOs are relatively inflexible and patients need to work with their primary care physician to get referrals to a specialist. Doctors will be limited to those that have agreed to be in a network of healthcare providers. But the overall cost of this type of individual health insurance should be the lowest of the three options offered.
Preferred Provider Organizations
This last health insurance option is a hybrid. Preferred Provider Organizations, or PPO, policies offer a level of service that combines features of the two previously mentioned policy types. During a visit to the doctor's office, policyholders will present their insurance card, pay a copayment, and have little or no paperwork to fill out later on.
Most of the time, patients will need to work through their primary care physician to see a specialist, but they also have the flexibility of going "out of network." This means it's possible to visit a doctor that does not have a fee agreement with the insurance carrier; however, patients will most likely be subject to deductibles and coinsurance payments as described in the traditional policy. With a PPO, there is more flexibility than with an HMO, but once again it comes at a higher cost to the policyholder.
Selecting a Health Insurance Policy
To help decide which type of individual policy might be the best choice in a given situation, think about the answers to the following questions:
- Do you like the freedom to be able to choose the doctors and hospitals that you use?
- Do you like filling out forms or mind keeping receipts and submitting them to your insurance company for reimbursement?
- Are you willing to pay the cost of routine doctor visits, well-care, and preventive care?
- Do you travel frequently, or have children that do not live with you and might see doctors in other parts of the country?
- Do you mind working with your primary care doctor to get an appointment with a specialist?
The best option for individuals that answered "yes" or "agreed" with most of the questions above might be a Fee for Service plan. If the response was "yes" to a couple of the questions above, then a Preferred Provider Organization might be the best fit. If most of the answers were "no," then a Health Maintenance Organization will do just fine.
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