January 2008
6 tips for buying individual insurance
| 1 |
Know your state laws
Whether you can get an individual health insurance policy , and how much you'll have to pay for it, depends largely on your
state's laws and regulations. Some states allow medical underwriting, a practice in which insurers can reject people with
illnesses, exclude specific conditions from coverage, and charge people with health issues much higher premiums. Other states
outlaw medical underwriting. You can research your state's rules at www.healthinsuranceinfo.net, maintained by the Georgetown University Health Policy Institute.
Even in states that allow medical underwriting, the federal Health Insurance Portability and Accountability Act (HIPAA) provides some protection if you are switching from job-based group coverage to the individual market even if you have a medical condition that would make it impossible to pass medical underwriting. To exercise your HIPAA rights, you first have to exhaust all job-based coverage available to you, including COBRA, which allows you to continue in your employer's plan for 18 months by paying the full cost plus 2 percent. Then you have to apply for an individual health insurance policy within 63 days after your old coverage ends. Every state has to make sure there is at least one individual health insurance policy available to you that has to accept you regardless of your health status and without waiting periods for pre-existing conditions.
A good place to start gathering information is eHealthInsurance.com, a reputable Web site that links to hundreds of individual plans nationwide. Use it to get a range of individual health insurance policies available in your state and to compare prices and benefit levels. But the quoted prices are available only to people who pass medical underwriting; in most states if you have any kind of health condition, you can be turned down or charged much more. You can also contact companies directly. Your state's insurance department Web site might have a list of companies licensed to sell health insurance in the state; some list licensed agents.
Make sure that any individual health insurance policy you buy covers everything that is "medically necessary" for any health problem, including emotional disorders. That includes doctor visits, outpatient and inpatient treatments, all hospital expenses, drugs, preventive care, rehabilitation care, prenatal care, and screening tests. Karen Pollitz of the Georgetown University Health Policy Institute says, "If you buy a policy that won't pay your expenses if you get sick, why did you bother?"
The real costs of an insurance plan include the monthly premium, the annual deductible, and the copays for office visits and prescription drugs. Make sure you understand which copays and coinsurance payments apply to the deductible and the out-of-pocket limit. You also need to know whether the individual health insurance policy has a lifetime cap on benefits. Unlimited is best, but experts we consulted say $2 million is a bare minimum. We have created tools you can use to compare features of different plans. For more information, see Consumer Reports' worksheet: Plan cost and coverage.
You might be eligible for insurance designed for people who can't pass medical underwriting, though you can't count on hearing about that from a broker or private insurer. Thirty-four states maintain high-risk pools for that purpose; others designate selected Blue Cross-Blue Shield plans as "insurers of last resort." But they might be expensive. State-specific information is available at www.healthinsuranceinfo.net.
| 2 |
Be careful leaving a plan
Even in states that allow medical underwriting, the federal Health Insurance Portability and Accountability Act (HIPAA) provides some protection if you are switching from job-based group coverage to the individual market even if you have a medical condition that would make it impossible to pass medical underwriting. To exercise your HIPAA rights, you first have to exhaust all job-based coverage available to you, including COBRA, which allows you to continue in your employer's plan for 18 months by paying the full cost plus 2 percent. Then you have to apply for an individual health insurance policy within 63 days after your old coverage ends. Every state has to make sure there is at least one individual health insurance policy available to you that has to accept you regardless of your health status and without waiting periods for pre-existing conditions.
| 3 |
Research the market
A good place to start gathering information is eHealthInsurance.com, a reputable Web site that links to hundreds of individual plans nationwide. Use it to get a range of individual health insurance policies available in your state and to compare prices and benefit levels. But the quoted prices are available only to people who pass medical underwriting; in most states if you have any kind of health condition, you can be turned down or charged much more. You can also contact companies directly. Your state's insurance department Web site might have a list of companies licensed to sell health insurance in the state; some list licensed agents.
| 4 |
Get adequate benefits
Make sure that any individual health insurance policy you buy covers everything that is "medically necessary" for any health problem, including emotional disorders. That includes doctor visits, outpatient and inpatient treatments, all hospital expenses, drugs, preventive care, rehabilitation care, prenatal care, and screening tests. Karen Pollitz of the Georgetown University Health Policy Institute says, "If you buy a policy that won't pay your expenses if you get sick, why did you bother?"
| 5 |
Look beyond the Premium
The real costs of an insurance plan include the monthly premium, the annual deductible, and the copays for office visits and prescription drugs. Make sure you understand which copays and coinsurance payments apply to the deductible and the out-of-pocket limit. You also need to know whether the individual health insurance policy has a lifetime cap on benefits. Unlimited is best, but experts we consulted say $2 million is a bare minimum. We have created tools you can use to compare features of different plans. For more information, see Consumer Reports' worksheet: Plan cost and coverage.
| 6 |
Keep looking
You might be eligible for insurance designed for people who can't pass medical underwriting, though you can't count on hearing about that from a broker or private insurer. Thirty-four states maintain high-risk pools for that purpose; others designate selected Blue Cross-Blue Shield plans as "insurers of last resort." But they might be expensive. State-specific information is available at www.healthinsuranceinfo.net.
