Purchasing Individual Health Insurance: What you need to know

Approximately 20 million Americans will be purchasing individual health insurance in 2010 thanks to lost jobs and benefit cuts. Learn more to find a plan that fits your health-care needs.

Individual insurance is also called private insurance because it is purchased on the private market, rather than being a part of workplace benefits. While called “individual,” these plans can cover your family or your spouse as well as you.

Purchasing individual health insurance

You can find individual insurance plans through a broker, one of the many online sites, or by going directly to an insurer. In all cases, you’ll need to do some research to ensure you select the best health-care coverage for you. Provisions of the health-care reform will help make this process easier in the future, but for now it’s up to you to carefully review your options.

It’s a good idea to have a basic understanding of health insurance before you begin comparing different individual insurance plans. Sites such as healthinsuranceinfo.net and healthcarecoach.com can provide you with a good knowledge base.

Individual health insurance plan options

Essentially there are three types of plan options for you to choose from: fee-for-service, HMOs, and PPOs.

• With fee-for-service plans, the insurer will pay for part or all of your care according to the policy you purchase. You get to choose your doctor and medical facility. Fee-for-service plans are typically the most expensive option.
• Health maintenance organizations (HMOs) require you to pay for your health care in advance through a monthly fee. Deductibles and copays are usually less expensive, but you must use a provider and clinic within the plan.
• With prefered provider organiztions (PPOs), you pay a deductible and copay (or coinsurance), but only when health care is received. You can utilize a network of providers and clinics for a discounted, negotiated rate. You can still see a doctor outside of your network, but it will cost more.

Determine your overall health-care needs

When reviewing your individual health insurance plan options, it’s important to not focus on premiums alone; you need to look at the plans’ complete offering. Consider:

• the deductible, copay and coinsurance costs.
• how much risk you’re willing to take. In general, the higher your deductible, the lower your premium.
• what type of health care you need now and in the near future. For example, if you want to have a baby in the next year, you’ll want a plan that includes maternity coverage.
• whether you’re comfortable with the out-of-pocket maximum (the maximum amount you’d pay for your health care costs over a set period of time), benefit limits and any exclusions.
• whether or not you want to keep your current doctor. This will help determine if an HMO or PPO plan is right for you.
• if you need to see certain specialists, such as a chiropractor. If you do, make sure you have coverage for these services.
• whether the individual health insurance plan covers prescriptions and x-ray costs. Prescription costs can add up quickly and x-rays are a routine part of some treatments, so it’s a good idea to make sure they’re covered in your plan. If you need to, you can also purchase supplemental prescription insurance.
• each plan’s coverage for hospital and surgery care and how deductibles and copays factor into these.
• the renewability terms of the individual health insurance policy. Some insurers can terminate your coverage when your policy period is over. Look for a noncancellable policy, which covers you at the same premium and benefit level up to a certain age, or a guaranteed-renewable policy, which you can renew year after year as long as you pay your premiums. (Be aware, however, that with a guaranteed-renewabble policy the insurer can raise premiums after your policy year is up.)

The bottom line: purchase the best individual health insurance coverage you can at the price you can afford. If you’re concerned about a plan’s affordability, check out ways to save on your health insurance.

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