Trying to understand the U.S. health insurance industry is one of the most complicated things the average American can do. There are so many different terms, options, and rules and regulations as to make it nearly impossible for the layman to really know what health insurance is all about. A common question asked by many uninsured individuals illustrates this concept perfectly. That question goes something like, “Where can I find individual coverage health insurance?”
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The question we posed in the previous paragraph seems straightforward. However, right off the top we have confusion because of a definition of terms. Most people outside of the industry would consider individual coverage health insurance to mean a policy that covers an individual worker and not his family. Under such a definition, the answer becomes simple: get your health insurance through your employer.
However, to those within the industry, individual coverage health insurance is less about whom a policy covers and more about how the subscriber purchases that policy. Essentially, an individual coverage policy is one that a consumer purchases by himself, without going through a larger group such as:
- An employer
- Trade group
- Credit union
- Alumni association
Under this definition, the question about where you would find such policies becomes more complicated simply because there are so many options.
If my employer doesn’t offer insurance, where can I get it?
In spring of 2009, a Consumer Reportshealth insurance investigation revealed that approximately 14,000 individuals lose their employer-based health insurance every day. Some of those losses were due to businesses closing or being unable to continue to afford health insurance coverage, but most were due simply to employee layoffs. When an individual finds himself in such circumstances, he has at several different options available, some of which are more expensive than others.
The first option is for the individual to continue paying for his current policy on his own, using what’s known as the COBRA plan. The COBRA plan is a federally mandated plan, which allows individuals to carry on with their own insurance for a limited amount of time while they search for a new job.
Unfortunately, this is the most expensive option, which could actually cost you up to 102% of the value of the plan in annual premium payments. In other words, you may have to pay every penny of your premiums plus an additional 2% for administrative costs. More information about COBRA can be found on the Department of Labor website.
A less expensive option would be to purchase an individual policy from a local HMO or a national or regional PPO, or a major medical policy from a company like Blue Cross and Blue Shield. All of these options have different costs associated with them depending on the type of coverage you need.
Why do individual policies provide less coverage than group policies?
If you’ve ever tried to get an individual health insurance policy you know that coverage is generally significantly, less than what you may have gotten through an employer-based plan. The reason for this lies simply in the idea of strength in numbers. The plan provided by an employer takes advantage of a large group of individuals all pooling financial resources in terms of premiums. More members in the group means more coverage can be provided for the same amount of money.
When you purchase an individual policy on your own, you are effectively the only person in your group. Therefore, you won’t be eligible for as much coverage at the same dollar amount. You can purchase additional coverage you might need by applying for what are known as “riders.”
Are there any groups I could get a better deal with?
If you’re self-employed, you might be able to access group health insurance through your local chamber of commerce or a relevant trade group. Their group policies are generally comparable to other large employer groups in your area. If neither of those possibilities is available, you can look at the alumni association where you went to college, a local credit union that might offer group insurance, or any other number of sources you can find. Unfortunately, your search isn’t going to be easy.
If all else fails you may qualify for government subsidized health insurance depending on your income levels. Several programs exist at the federal, state, and local levels. To find out more information about your options you can check with your state insurance department or your local social services department.
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