From the recently laid-off worker to the entrepreneur whose start-up isn’t large enough for group coverage, more and more people are turning to the individual health insurance market. In Michigan alone, as many as 500,000 people are insured with individual policies.
“This is not a new phenomenon,” says Ray Sohn, director of the Individual Market at Priority Health. “The individual market has been growing considerably over the last four or five years, and it provides another option for access to the health care arena.”
Smart Business spoke with Sohn about the options that are available for consumers in the individual health care market.
What options are there for exiting employees?
COBRA allows those who leave employment to continue to receive health coverage for generally up to 18 months, or until they become entitled to other coverage. COBRA participants are required to pay the premium cost that the employer was providing for them during their employment. Also, if your health coverage ends because you are no longer a group member, you may be able to continue group coverage through group conversion or through the individual health care market.
What is group conversion?
Group conversion is a contract offered to employees who are coming off of their group coverage. If they elect to exercise it, they can automatically get a group conversion contract on a guaranteed issue basis. They do have to pay the premium, but it gives them a relatively easy transition. They don’t have to shop around and are able to stay with the same insurance company. Group conversion provides a bridge to these individuals’ next policy. At some point, they would find a new employer, start their own business or select a different individual market option.
Sometimes people look at the benefit design of group conversion contracts and elect to look at the individual market, because group conversion contracts often are not as rich in benefits as another individual plan they could purchase.
Why is the individual health plan market growing?
The days of working for the same corporation for 35 years and obtaining a retirement plan are over. We’re seeing the retooling of various industries. Also, many people are starting businesses or becoming independent consultants. That movement and change have dictated a demand for individual health care products. The new health care reform legislation seems to indicate that the individual market will continue to grow, as well. The individual health plan market is a very prominent space for health plans, especially in Michigan, and you’re starting to see more options in that particular market.
