Individual Health Insurance: How Does It Work?
People who buy medical coverage in the individual insurance market usually do so because they lack access to group health coverage plans hired by employers or not meet the necessary requirements for accessing to public programs such as Medicare or Medicaid.
Most people in search of personal medical insurance plans face difficulties in finding an insurer to accept them, which is accessible from the economic point of view or which provides adequate coverage. People with serious or chronic illnesses such as diabetes, are likely to face more difficulties to buy an individual health plan.
Individually purchased health insurance legislation may vary with the states
The states are responsible for regulating the market for this type of health insurance. The regulations concerning who can obtain insurance and what benefits are included in vary with the place you live in. In most states, the market for personal health plans is characterized by the “Health Risk Assessment”; this means that insurance companies in that market decide whether they will sell medical coverage based on health status, previous medical history, age, sex and other characteristics of the person requesting insurance, and if they choose to provide coverage, decide what benefits they will offer and what premium they will charge. For example, diabetes is a condition in which most insurers when assessing medical risks automatically deny coverage to the person concerned. However, that does not happen in all states. For example:
– In some states like New York and new Jersey, medical underwriting is illegal in all cases in the market for individual health insurance. In those states, all insurance policies must be sold “guaranteed issue,” meaning that one can not reject anyone based on their health status. In those states, insurers are also prohibited to charge premiums based on health status. By contrast, insurers must use a single “community rate” to calculate premiums for all residents.
– In other states, it is only required to sell individual medical insurance with “guaranteed issue” to certain residents (for example, those with a history of uninterrupted coverage).
– A few states designate one or two insurance companies as “insurers of last resort”. These companies (generally Blue Cross Blue Shield plans) must offer guaranteed issue coverage, but even so, other insurers may perform health risk assessments. Community fee may or may not apply to the insurer of last resort, depending on the state in which you reside.
– In most states, all private insurers in the individual market can perform health risk assessments at least in some cases. Many of these states (though not all) establish high-risk insurance pools, which are public programs that provide coverage to some “uninsurable” individuals who are rejected by private insurers.
4 tips for buying health insurance in the individual market
– Contact the office of the commissioner for the state where you live to find out what kind of legislation on individual coverage in that state exists, and where you may obtain insurance coverage.
– Determine costs at worst. It is recommended to check what is the maximum you will have to pay in the worst case scenario, in the case of a serious illness for example. You can determine that by adding your out of pocket limit to your monthly insurance premiums. This figure is the maximum that you have to pay in the plan. The “summary of benefits and coverage” provides information on the different services and what the insured will have to pay. The recommendation is to try to guess what you will need in the course of the next twelve months to determine what we have to pay for each type of insurance. This course is not easy, but some people who have certain illnesses like diabetes know the type of services they require.
– Is your doctor on the list? Making sure that your doctor is in your insurer’s network is important as it usually costs more to visit a doctor out of the network in some plans.
– Need of special medicines? You have to know if the plan will cover specialized medicines like for treating cancer.