What is driving people toward individual health insurance plans?
While consumers value choice, and research shows that people prefer more generous benefits, cost is often the primary factor for individual health insurance consumers. Individual policies are often simpler and somewhat ‘scaled down’ in comparison to group plans, in an effort to make premiums more affordable. Studies indicate that less than 25 percent of individual consumers can afford to purchase policies that will cover 95 percent of total spending. As a result, most individual policies include upfront deductibles that the individual will have to pay before benefits begin, as well as co-payments and out-of-pocket costs that are paid directly to medical providers at the time of service.
Is individual health insurance easier to get?
Individual health insurance companies are much more limited than group insurance companies in their ability to spread risk. Even though an individual insurance company can choose not to offer coverage to people with serious medical conditions, most Americans do not have perfect medical histories and still qualify for individual coverage.
There are, however, some individuals who do not decide to purchase health insurance coverage until they know they have a medical problem or condition that will require benefits. This is known as adverse selection, and can be a serious problem for individual market insurance companies since their ability to spread risk is so limited. To help prevent adverse selection, insurance companies are allowed to implement pre-existing conditions, which means certain conditions will not be covered for a specific period of time known as an exclusionary or waiting period. The amount of time an insurance company can look back at your medical history and the length of time an exclusionary period can last vary by state. Fortunately, those who enroll and become sick or develop a medical condition are protected by HIPAA and cannot be excluded from having coverage renewed or placed into a new underwriting class.
What should employees look at to determine which type of health insurance plan they should purchase?
Of course you have to look at the monthly premium, but people should be aware of other out-of-pocket costs, such as deductibles, co-pays and preventive care, like flu shots and regular checkups. Also, look at cost sharing for drug coverage. Employer-sponsored plans usually offer a lower price for generic drugs over brand-name drugs, but individual plans don’t always have that option.
As with any purchase, the decision will vary from person to person. Determine exactly what you need out of your health insurance and what you’re willing and able to pay. Whether you are part of the market segment looking for long-term coverage or someone with short-term temporary needs, there are a variety of individual health plans available. Talk with an advisor who can help you find the appropriate plan for your specific needs.
Sue Bergman is a sales executive for JRG Advisors, the management company for ChamberChoice. Reach her at (412) 456-7236 or [email protected].
