Finding the Right Individual Health Plan

INSURANCE

Ginger Applegarth

Decision Center

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Ask the Experts

here are lots of good reasons why you may be tiptoeing around without health insurance. Do any of these sound familiar?

You're self-employed and the premiums seem exorbitant.

Your employer doesn't offer coverage.

You're a new hire and have to wait six months or a year before you can join a plan.

You're not working and therefore don't have access to group insurance.

Purchasing an individual medical policy isn't an easy task, but it's a necessary one. Individual medical policies are much harder to qualify for, are more expensive than group insurance and have more restrictions on coverage than their group counterparts. It's also hard to know where to get started to buy an individual policy. So what do you do?

The first thing is to decide whether you need permanent coverage or coverage for a certain period of time, such as six months (until your group insurance kicks in, for example). If you only need temporary coverage, you're in luck because there are a number of private companies selling policies for periods of up to one year. If you need the insurance long-term, you've got some work ahead of you.

Private insurers are usually much less interested in individual policyholders than group insurers. So your best bet is to look at the nonprofit medical providers in your area. These include HMOs (health-maintenance organizations) or your state Blue Cross Blue Shield. Nonprofit insurers are more likely to accept you than traditional for-profit insurers, and there may even be "open enrollment" periods when you can join regardless of your health.

If you own your own business, even if you're the only employee, you can actually get group insurance - which, again, is easier to obtain than individual insurance. It seems bizarre, but there actually is group coverage for a "group of one."

Make a list of all the business, professional and fraternal organizations and associations to which you belong. Call each one and see if it offers some kind of group medical plan. This is technically group insurance, but you'll have to be evaluated based on your own individual medical situation. However, the terms of the policy are likely to be more advantageous than if you go out and get coverage on your own.

If you're uninsurable for medical reasons, your first stop should be to call your state department of insurance. Many states have special programs to provide medical coverage for children and adults who can't obtain insurance on their own because of their medical histories. The premiums are subsidized and it's much less expensive than if you tried to buy insurance on your own. Ask your state insurance department for a list of all the health-care providers in your area that allow individuals to join, and also see if there are any state programs available to you (even if you're healthy).

If you're lucky enough to have a couple of individual insurance options, how do you compare? Consider these factors in choosing the policy that's right for you:

1. What's the deductible?

Throw those ideas of a $250 deductible and $15 co-payments out the window - they may sound great for group plans, but with an individual policy, you're probably facing a deductible of $3,000 or more. But remember: Because insurance should cover the most catastrophic needs first, the deductible should figure into your decision-making, but it should not be the deciding factor.

2. What's the lifetime cap?

In other words, how much coverage will this policy provide? Does it stop paying after $1 million? $2 million? Does it have an unlimited lifetime benefit? When you think of how long you may be relying on this policy, the lifetime cap becomes much more important than the deductible.

3. Does the coverage exempt pre-existing conditions?

You may have a pre-existing condition that is excluded from coverage altogether (which may be the main reason you're buying individual insurance in the first place), or you may have to wait a year or more before you can get the benefits. What if there's an emergency in the meantime? Unfortunately, individual policies have strict language about pre-existing conditions, and you need to read the fine print carefully before you make a decision.

4. Do you have any special coverage requirements?

Do you need mental health benefits for you or a family member, or perhaps spousal coverage? Again, unfortunately for the person being insured, individual policies are not very generous. Certain policies may provide better benefits than others.

The bottom line is that getting good individual health insurance coverage requires work, but the time is well spent. No matter how carefree you may feel, you still must have some worries about what would happen if you were in an automobile accident, or hospitalized for an extended period, and had to pay those costs yourself. Individual health insurance can help relieve some of those worries.

If you're uninsurable for medical reasons, your first stop should be to call your state department of insurance.

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