Individual, Family, & Self Employed Health Insurance Plans

If you are self-employed or if your company does not offer group policies, you may need to buy individual health insurance. Individual policies cost more than group policies.

Individual health insurance covers the medical expenses of only one person or family. Unlike group insurance, you purchase individual insurance directly from an insurance company. When you apply for individual insurance, you are evaluated in terms of how much risk you present. This is generally done through a series of medical questions and/or a physical exam. Your risk potential determines whether you qualify, and how much your insurance will cost.

You can get fee-for-service, HMO, or PPO protection. But you should compare your options and shop carefully because coverage and costs vary from company to company. Individual plans may not offer benefits as broad as those in group plans.

If you get a noncancellable policy (also called a guaranteed renewable policy), then you will receive individual insurance under that policy as long as you keep paying the monthly premium. The insurance company can raise the cost, but cannot cancel your coverage. Many companies now offer a conditionally renewable policy. This means that the insurance company can cancel all policies like yours, not just yours. This protects you from being singled out. But it doesn't protect you from losing coverage.

Before you buy any health insurance policy, make sure you know what it will pay for...and what it won't. To find out about individual health insurance plans, you can call insurance companies, HMOs, and PPOs in your community, or speak to the agent who handles your car or house insurance. Doing your research ahead of time can help you get an affordable individual health insurance plan.

Some organizations—such as unions, professional associations, or social or civic groups—offer health plans for members. You may want to talk to an insurance broker, who can tell you more about the indemnity and managed care plans that are available for individuals. Some States also provide insurance for very small groups or the self-employed.

What will the insurance company want to know?

Before issuing an individual insurance policy, the insurer will want to know everything about your personal health history. It is unwise to try to hide a pre-existing condition from your insurer, since many insurers use information from the Medical Information Bureau (MIB) to determine whether an applicant is insurable. If the insurer doesn't want to cover a particular health condition, you may still be able to get a policy with an exclusion rider.

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What are the benefits of individual coverage?

If available, group insurance is generally a better option, since it is usually more comprehensive and less expensive than individual insurance. However, individual coverage is infinitely better than being uninsured in the event of illness or injury. Although you may think you can do without health insurance, you are taking a major risk if you choose not to get coverage. An unexpected illness or serious injury can put you and your family in financial peril.

In a group insurance situation, the provisions of the policy are negotiated between the insurer and master policyowner (usually an employer or association). With individual insurance, you are directly in control of your policy. You can negotiate to have certain provisions included or excluded, and you can often choose your deductible amount and co-payment percentage. Keep in mind, however, that these things will affect your premiums.

Tips when shopping for individual insurance:

• Shop carefully. Policies differ widely in coverage and cost. Contact different insurance companies, or ask your agent to show you policies from several insurers so you can compare them.
• Make sure the policy protects you from large medical costs.
• Read and understand the policy. Make sure it provides the kind of coverage that's right for you. You don't want unpleasant surprises when you're sick or in the hospital.
• Check to see that the policy states: the date that the policy will begin paying (some have a waiting period before coverage begins), and what is covered or excluded from coverage.
• Make sure there is a "free look" clause. Most companies give you at least 10 days to look over your policy after you receive it. If you decide it is not for you, you can return it and have your premium refunded.
• Beware of single disease insurance policies. There are some polices that offer protection for only one disease, such as cancer. If you already have health insurance, your regular plan probably already provides all the coverage you need. Check to see what protection you have before buying any more insurance.

Family Health Insurance Plans

Like the name suggests, family health insurance plans are for families and since these health plans are covering more than one person, the total cost is going to be higher. As a matter of fact, the bigger the family, the bigger the price tag. But, overall, the price per person is usually much cheaper than if you were to purchase individual insurance for each family member.

Also, the ages, gender, and health choices, like smoking, from each family member will play a big part in just how much a policy like this will cost you. There are indemnity plans that are for families and they offer the same freedoms as the individual plans. This can be a real bonus when dealing with multiple people.

Family health insurance plans also come in the managed health care package and work pretty much the same way as the individual ones. The cost will be higher than the individual plan, but not as high as the family indemnity plan.