Individual Health Insurance

According to some of the latest government statistics, nearly 16 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 simply more expensive, therefore those costs are passed on to the consumer.

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 that you should ask yourself when choosing a health plan.

Finding Individual Health Insurance Plans

When purchasing health insurance, an individual can have difficulty finding insurance coverage if they have a preexisting medical condition, or due to factors such as geographic location or age.  This occurs because many 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.

If your employer does not offer group health insurance, then you need to make sure you compare your options when shopping around.  That's 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 you are shopping for individual health insurance, you basically have three insurance 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 the individual the most choices of doctors and hospitals.  Participants will usually be charged a monthly fee or premium for the policy.  You will also be responsible for a deductible, which usually ranges from $250 to $1,500.  This is the money you will have to pay out of pocket each year before your insurance carrier contributes to the cost of your medical care.

After the deductible is paid or satisfied, you will have a coinsurance arrangement with your insurance company.  This means they will share in the cost of your care - after the deductible is paid.  Typically, the insurance company will pay 80% of your medical and health care costs.  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 policy.  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 - $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 because you need to work with your primary care physician to get referrals to specialist.  You're also limited to doctors that have agreed to be in their network of healthcare providers.  But the 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, you present your insurance card, pay a copayment, and have little or no paperwork to fill out later on.

You need to work through your primary care physician to see a specialist, but you have the flexibility of going "out of network."  This means you can visit a doctor that does not have a fee agreement with your carrier; however, you will most likely be subject to deductibles and coinsurance payments as described in the traditional policy.  With a PPO, you have 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 you decide which type of individual policy might be the best choice in your situation, you should think about your 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?

If you answered "yes" or "agreed" with most of the questions above, then your best option might be a Fee for Service plan.  If you said "yes" to a couple of the questions above, then a Preferred Provider Organization might suit your needs.  If you found that most of the above questions were answered with a "no" then a Health Maintenance Organization will do just fine.

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