1. Health

How to Buy Individual Private Health Insurance

Don't Have An Employer to Subsidize? Not Part of a Group to Lower Costs?

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Updated April 09, 2013

If you don't have an employer who subsidizes the cost of health insurance as a benefit, and you don't qualify for any of the subsidy programs offered for those with lower income like Medicaid or CHIP (Children's Health Insurance Programs), or if you can't find an acceptable alternative to health insurance, then you'll need to purchase private individual health insurance.

Here are the steps to take to determine how best to insure your family.

Explanations for each step can be found below.

  1. Determine what kind of coverage and how many different policies you will need.

  2. Decide what kind of deductible, copays and insurance will best meet your needs.

  3. Find options for comparison.

  4. Double check that the options you have found are offered by real insurance companies. (see Fraud note below)

  5. Compare the options against each other to make the best choice for you.

What Health Insurance Policy(ies) Will You Need?

If you need insurance for your family (yourself, plus a spouse/partner and/or children) then consider two approaches to keep the cost of insurance down.

• If all family members are generally healthy, you can cover the entire family as a unit with one policy.

• However, if one or more family members have ongoing health problems, chronic conditions, or major medical challenges, or you anticipate the need for surgery in the next year, you might choose instead to buy two or more policies - one each to cover the family members who have ongoing medical challenges (which will be very expensive), then one less expensive family coverage for the rest.

What Affects the Cost of Individual Private Health Insurance?

Paying for health insurance seems obscenely expensive! On the other hand, paying for healthcare without insurance can make obscenely expensive seem like a bargain.

What you will pay for your coverage, in total (meaning premiums + co-pays + co-insurance) will be a function of your (or your family's) age, your health status, whether or not there are smokers, possibly their weight, and where you live. The older you are, the more expensive coverage will be. The healthier you are, the less expensive it will be. What state you live in will also have an effect on your cost since insurers are restricted to selling policies only in certain states.

If you have had coverage on a continuous basis prior to purchasing individual insurance, then it may be easier to find a policy that will cover you for a price you are willing to pay. This is because there will be clear records on your use of insurance in the recent past for the new company to review. For example, you may have had an employer who subsidized your insurance, or may have recently left the military. Learn more about finding insurance if you have previously had coverage and your change in status requires a new, individual solution.

Your goal, of course, is to find the most appropriate coverage for your family for the least amount of money. Notice that does not say the most coverage - because the most coverage could be very expensive with very little balance against your real needs.

Medical costs and their coverage by insurance is very much a "pay now or pay later" proposition. To understand that best, be sure you understand the terminology used for health insurance:

Then, choose between two scenarios:

1. Higher co-pays, plus higher coinsurances, plus higher deductibles will equal lower premiums. In other words, you'll pay less to the insurer month to month, but you'll pay a lot more when it comes time to actually see your doctor, fill a prescription, or access care.

This scenario is well-suited to families who only need occasional doctor's appointments, don't have any chronic illnesses that require constant doctor visits or tests, and don't have regular opportunities to get into accidents, break bones, need surgeries, or pick up difficult infections. You can consider high deductible or catastrophic health insurance, especially when paired with a health savings account.

2. Lower co-pays, plus lower coinsurances, plus lower deductibles will equal higher premiums. Here you'll pay much more in premiums each month, but when you actually seek care, there will be less out-of-pocket expense. This scenario is best suited to families who require regular or difficult care, because their premiums will be fixed, while their out-of-pocket for each access will be less.

Finding Options - Individual Policies and Companies

There are several resources for finding health insurance policies to compare to each other. Each of them has a brief questionnaire to help you determine your options. In some cases, they also include some of the care subsidy programs like Medicaid or CHIP. Find options at:

Beginning in 2014, you will need to be sure that the plan you choose is a Qualified Health Plan (QHP) in order to satisfy the government's individual mandate as it regards the Affordable Care Act (healthcare reform.)

If you or a family member has a pre-existing condition, you may find it more difficult to identify possible insurers for comparison. Through the Affordable Care Act in 2010, it became illegal to turn down a patient for insurance if they have a pre-existing condition, although it should also be noted that no constraints were put on the pricing of such insurance. Find more information or apply for coverage for patients with pre-existing conditions at Healthcare.gov.

A word of caution about fraud: Especially since passage of the Affordable Care Act (healthcare reform), more and more fraudulent companies claiming to offer health insurance, or medical plans, or many other descriptions that skirt the concept of providing help to pay for your healthcare needs, have appeared. You'll want to be sure that whatever plan you choose is a real bona fide insurance plan, including any of the plans you find through any of the links above.

Make Your Policy Comparison

Once you have identified two or more options, you'll want to take steps to figure out which policy option best covers your needs, weighing your actual cost against your anticipated usage. Find those health insurance policy comparison steps here.

What About Next Year?

Finally, remember that once you've chosen the best plan for you this year, doesn't mean you won't need to do the same next year. Plans change, coverage changes, options and opportunities - even within the same plan - change constantly.

Your best protection for making sure you get the coverage you need at the best price for you is to make this review once each year before you commit to your plan for the following year.

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