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A Layman's Guide to Individual Health Insurance
Building your foundation of essential knowledge about individual health insurance policies.
What Is Individual Health Insurance?
Regulated under state law, individual health insurance is coverage purchased by an independent person (like you), not provided by an employer. Although it is called individual health insurance, the available policies can cover your family.
When you say “cover,” what exactly does that mean?
Individual health insurance helps pay for medical expenses for an illness, injury, or other condition. If you are unsure of the benefits of this coverage, consider the following:
- Accidents or health issues can occur at any time.
- Medical care can be incredibly expensive and is the number one cause of bankruptcy.
- Insurance companies give you access to networks of doctors and hospitals with negotiated lower rates.
More specifically, individual health insurance plans must cover 10 essential health benefits, including:
- Ambulatory services
- Emergency services
- Maternity care
- Mental health care
- Prescription drugs
- Laboratory services
- Preventive and wellness services
- Pediatric services
- Rehabilitative and habilitative services and devices
How Does Individual Health Insurance Differ from Employer-Based Coverage?
Health insurance provided by your employer is also called group coverage. Companies perform research, select an insurance company, and choose plan options for employees. This is the status quo for many businesses, but times have changed. Rising healthcare costs have hindered the ability of some companies to pay for health insurance despite penalties they may face under the employer mandate. The effects of these costs are especially true for small businesses. Since small businesses are exempt from the employer mandate, offering group coverage simply may not be an option.
But don’t fret. This change isn’t for the worse. People without access to employer health insurance plans can purchase individual health insurance, and there are several advantages:
- You have choices. Select the insurance company, plan, and options that best fit you and your family’s needs.
- You have control. Switch plans, options, or insurance companies without HR telling you what to do.
- You have independence. Take it with you no matter when, where, and how you change jobs.
It is important to note that if your employer is able to offer group coverage, you are not eligible for subsidies.
What Do These Health Insurance Terms Mean?
Though there are dozens of terms in the realm of health insurance, there are four primary terms that you should understand.
Coinsurance: the percentage of your medical bill that you pay after your deductible has been paid.
Copayment (Copay): the flat fee you pay each time you visit the doctor or fill a prescription. It may or may not count toward your deductible.
Deductible: the set amount you pay toward your medical bills every year before your insurance company starts paying. This amount varies by plan.
Premium: the amount you pay your health insurance company in order to keep your coverage active. It is usually paid in monthly installments.
At this point, you have a fairly good understanding of what individual health insurance is, how it works, and how it’s different from what an employer may have offered. You may now be wondering what can stop you from getting a policy.
Are There Reasons Why You Can’t Get Individual Health Insurance?
As of 2014, thanks to the Affordable Care Act, health insurance companies may no longer exclude, limit, or deny coverage to any American based solely on a pre-existing condition.
As a result, everyone can generally only purchase coverage during the Open Enrollment Period. There are specific deadlines you must meet in order to get coverage for the upcoming year, and we encourage you to contact HealthMarkets.
What if I miss the Open Enrollment Period?
If you happen to miss the Open Enrollment Period—which runs from November 1, 2015 to January 31, 2016—there are qualifying events that may allow you to still get a health insurance policy. The following examples (in the image below) are typically considered qualifying events:
What Affects the Cost of Individual Health Insurance Premiums?
Remember the term premium? It was one of the four primary terms we talked about. Your premium is influenced by five factors.
Age: premiums may be as much as three times higher for older people.
Location: yes, where you live can affect your premium. Differences in competition, state and local rules, and cost of living account for the changes.
Tobacco use: tobacco users may be charged up to 50 percent more than those who do not use tobacco.
Single vs. Family: insurers may charge you more for a plan that also covers a spouse and/or any dependents.
Metal Levels: there are five metal levels. Bronze plans often have lower monthly premiums but higher out-of-pockets costs when you receive care. Platinum plans usually have the highest premiums but lowest out-of-pocket costs.
What are the five levels (sometimes referred to as tiers) of individual health insurance?
- Bronze plans are designed to pay 60 percent of medical expenses.
- Silver plans are designed to pay 70 percent of medical expenses.
- Gold plans are designed to pay 80 percent of medical expenses.
- Platinum plans are designed to pay up to 90 percent of medical expenses.
The fifth is a catastrophic plan. For eligibility of this plan, an individual must be younger than 30 or receive a “hardship exemption”.
It’s Time! Let’s Talk About Getting Health Insurance
Let’s review all of what you’ve learned regarding individual health insurance.
- What it is and what it covers
- How it’s different than your employer’s coverage
- Important terms associated with it
- When you can enroll in a plan
- What affects the costs of your plan’s premium
Understanding those five vital pieces of information will now help you have a very productive conversation with a trusted partner like HealthMarkets. Remember, there is a difference between working with a licensed agent and a government navigator. See our graphic below for some examples.
The final step is getting a free quote, or calling us at (800) 360-1402. So, don’t wait. It’s time to get the coverage you and your family need.
About the Author: Luci Lopez
Luci is a visual storyteller (10 years!). Baker. Dog lover. Proud UTPA and UNT alumna. Curious about the unknown.
"Consumer Guide To Individual Health Insurance." 2013.
"How Health Insurance Marketplace Plans Set Your Premiums." 2015.