An individual health insurance policy is an option for those without access to an employer-sponsored group health insurance policy. While a group policy is generally more desirable, an individual policy often provides the necessary coverage for a single person or an entire family. Understanding how an individual health insurance policy works enables you to determine if it fits your health care needs.
Benefits
An individual insurance policy protects you financially when you need medical care, whether for routine preventative checkups or care for serious illness or injury. The policy makes it more affordable to visit the doctor, possibly making you more likely to go early before medical conditions become a major problem.
Function
Individuals or families purchase an individual health insurance policy from an insurance agent. Most agents have access to a variety of health insurance companies for more options. A premium is calculated based on the health status of the individuals on the policy and the levels of coverage. In most cases, the health insurance pays for a certain portion or charges and the insured individual covers the rest.
Difference
While the risk and expense of a group policy is spread out over several people, an individual policy is solely based on you and your family. This means the premium for the individual policy is calculated based on your specific health risks. If you have medical issues, you are likely to pay more than you would on a group plan.
Individual health insurance plans often cover less than a group policy through an employer. Coverages that are standard on a group policy might require a rider with additional premiums on an individual policy. Maternity coverage, vision and prescription drug coverage are common examples.
Coverages
The coverages of an individual health insurance plan vary considerably from one to the next. The insurance company usually has control over what coverages are offered. The deductible is the amount you must pay before the insurance policy pays. A higher deductible usually means a lower premium.
Copayments and coinsurance apply to each doctor's visit and are on top of the deductible. The copayments and coinsurance sometimes vary depending on the type of doctor or service provided. For example, the emergency room copayment is usually higher than an office visit.
Your out-of-pocket maximum is the most money you will pay during a year. Once your out-of-pocket bills for the year equal that amount, the insurance company pays all bills up to the policy's maximum benefit amount.
Considerations
Pre-existing conditions are a concern under individual insurance policies. Most policies will not cover medical care for diseases, injuries or illnesses you already had before the policy began. The policy might not ever pay for medical services related to the condition, or it might have a temporary period at the beginning of the policy when it won't pay. You might also have difficulty securing an individual health insurance policy if you have current or past health problems.
Member Comments