What is Individual Health Insurance?
Individual health insurance plans can be either purchased for an individual or for a family. When purchased for a family, the policy is under the ‘Subscriber,’ which is the primary person on the policy, and then additional dependents are added such as spouses and children. People purchase these policies in order to reduce the overall costs of medical bills that could build dramatically in the case of major medical services such as being admitted to the hospital. In addition, purchasing a health insurance plan reduces the overall cost of doctor visits because you have the benefit of gaining access to a network of doctors which have lower, negotiated rates with insurance companies. If you were to pay these expenses out-of-pocket without a health insurance plan, the costs could be very high depending on what health services you need.
Health Insurance Definitions
This section contains some insurance definitions in order to help you while navigating the various health insurance products:
Premium: The amount you need to pay (usually per month) for an insurance plan to stay active. Premiums vary based on a variety of different factors including your plan deductible, your age, etc.
Deductible: The amount of money you need to pay each year before your plan starts paying for medical services. Deductibles vary between plans and some plans could have no deductibles. Deductibles normally reset at the beginning of the plan year. In general, the higher your deductible is, the lower the cost of the policy and vice versa. This is because, if you select a higher deductible, you are paying more of the medical costs up front rather than the insurance company paying for them. And so, if the insurance company needs to pay less overtime, then the premium will be less.
Copayment: Is a level fee that you need to pay when receiving a certain medical service. The plan decides what services they will offer to members as copayments and if these copayments are to be paid before or after you meet your plan deductible. For example, on one plan, you might go to the doctor’s office and, if you’ve already met your plan deductible for the year, then you would just pay the copayment amount for that doctor visit. Copayments also vary depending on what type of service you are receiving whether it be going to your primary care doctor, going to a specialist, getting blood work done, etc.
Coinsurance: Is a certain percentage you need to pay when receiving a medical service. For example, say your doctor visit was $100, and you have already met your plan deductible for the year. Your plan’s coinsurance for this service is 30%, and so you would pay 30% of $100 ($30) and then the plan would pay the other 70%. Coinsurances are vary depending on what type of service you are receiving and each plan has different coinsurance amounts for different services.
Out of Pocket Maximum: The maximum amount that you would need to pay for services that are covered by the plan over the course of the plan year. Each plan could have a different out-of-pocket maximum and, after one meets this out-of-pocket maximum amount, then the plan covers 100% of covered services for the rest of the plan year. There are certain things that do not contribute to your out-of-pocket maximum amount, including monthly premiums, out-of-network services and expenses for services that your plan does not cover. Out-of-pocket maximums are different for individual and family plans.
Types of Health Insurance Plans
Health Maintenance Organization (HMO): Type of health plan that has a limited amount of doctors that have contracted with the HMO. In this type of plan, you need to obtain care from doctors or hospitals that have contracted with the plan (are in-network) in order for the plan to cover services. The HMO generally will not cover out-of-network care or expenses except in the case of an emergency. When enrolling in the HMO plan, it is important to check to see if your doctors are in-network to be eligible for certain benefits. You can check which providers are in-network by going to the insurance company website.
Preferred Provider Organization (PPO): Type of health plan that contracts with doctors and hospitals in order to create a network. In this type of plan, you have the option of either going to providers who are in-network or out-of-network. Going to in-network providers will cost less overall, but you can go to out-of-network providers at an additional cost. Just like HMO’s, be sure to check to see if your doctors are in-network as going to in-network providers is a reduced expense for covered services.
Point of Service (POS): Type of health plan where you will pay less if using the doctors or hospitals within that network. This type of health plan combines characteristics of an HMO and a PPO plan. You can also use doctors or hospitals out-of-network at an additional cost. POS plans require you to obtain a referral from your primary care doctor (PCP) in order to visit a specialist.
Health Savings Account (HSA): Type of health plan in which you are able to set money aside on a pre-tax basis towards qualified medical expenses. This money that is set aside can be used to pay for deductibles, copayments, coinsurance, and some other expenses but cannot (in general) be used to pay your premiums. In order to use an HSA, you must be enrolled in a High Deductible Health Plan (HDHP), which is a type of policy that only covers preventive services prior to paying your deductible. There are certain limits as to how much one can contribute to an HSA per year and these limits change each year. If you do not spend your HSA funds in one year, they can rollover to the next year.
Qualifying for Financial Assistance
If your annual income is below a certain threshold then you may be able to qualify for financial assistance when paying for health insurance premiums. The amount of financial assistance you receive will depend on the size of your household as well as your annual income. If you qualify for financial assistance, and wish to use your subsidy for paying health insurance premiums, then you can look for health insurance plans “On-Exchange,” meaning that you can obtain a plan that is sponsored by a government entity. If you do not qualify for financial assistance, then you can purchase a health insurance plan “Off-Exchange,” meaning that the plans your purchase are made by private insurance companies. You can find more information about financial assistance online or by contacting our office.
Eligibility for Individual Health Insurance Policies
At this point, you are only able to enroll in an individual health plan either by:
- Enrolling in health insurance coverage during the Open Enrollment Period. The Open Enrollment Period for Individuals looking for health insurance starts on November 1, 2020 and ends on December 15, 2020. During this period of time, those without a Qualifying Event are able to enroll in an individual health insurance plan. Anyone who enrolls in a plan during the Open Enrollment Period will have a plan effective date of January 1st, 2021.
- Becoming eligible for health insurance due to a Qualifying Event. There are different Qualifying Events that make someone eligible to enroll in a health insurance plan in the middle of the year instead of during the Open Enrollment Period. Various Qualifying Events include: losing existing health coverage from a job, turning 26 years old and losing insurance from a parent’s policy, getting married or divorced, having a baby, moving to a different zip code or county, changes in income that affect the coverage you are qualifying for, becoming a U.S. citizen, leaving incarceration, and others.
If you are trying to apply for coverage in the middle of the year, and do not have a Qualifying Event, then you will need to wait until the next Open Enrollment Period in order to enroll in a health insurance policy.
Selecting The Right Plan For You
There are many health insurance plans that insurance companies offer, so it is important to carefully review the plans to ensure you select a suitable one for your unique situation. We can analyze your needs and help you to select a suitable plan for your budget. In addition, we carefully examine the plans to make sure that the plan’s benefits fit your future health objectives. Please contact our office for more information on what plans we offer and we will be happy to assist you!