Why Buy An Individual Health Insurance Policy?

If your employer doesn't provide health insurance coverage or you've recently lost your job, you may be wondering if you should buy an individual health insurance policy. U.S. health care legislation passed in 2010 will eventually require coverage for everyone, but even without the mandate, buying an individual plan provides a number of benefits.

Medical Cost

You can't predict what your medical costs will be. You may incur medical bills because of a car accident. A few doctor's appointments could even put you in debt. People with health insurance are also more likely to have a regular doctor and get care when they need it, according to the U.S. Department of Health and Human Services. They are also more likely to get preventative care.

Types

Group insurance offers medical insurance to members of groups like employees of a company or members of an association. Individual policies were designed to provide insurance to unemployed or self-employed persons not covered under their employer's plan. Premiums are relatively high for this type of insurance, because individuals can't negotiate lower rates the way employers can, according to USA Today.

Mandate

Under health care reform legislation, most Americans will have to purchase health insurance by 2014 or pay a penalty. The penalty will start at $95, or up to 1 percent of income, whichever is greater, and rise to $695, or 2.5 percent of income, by 2016. People with low income will continue to be eligible for Medicaid, a program for Americans who can't afford health care. Some people with religious objections would not have to buy policies, nor would American Indians, people in prison, or illegal immigrants. If your employer doesn't offer coverage, you'll be able to purchase a plan through new marketplaces that will sell policies to individuals, called insurance exchanges. Also in 2014, insurance companies will not be able to deny coverage to anyone with preexisting conditions.

COBRA

Buy an individual health insurance policy if you've lost your job and COBRA coverage has run out or is too expensive. COBRA is the Consolidated Omnibus Budget Reconciliation Act, which gives workers and their families who lose their jobs the right to choose to continue coverage provided by their group health plan for limited periods of time under certain circumstances. Under COBRA, workers ordinarily have to pay the entire premium, plus an administrative cost. You may be able to find a cheaper individual plan, although coverage will probably be more limited, according to USA Today.

LIfestyle

Purchase an individual plan if employer-based policies are not offered or are not right for you. For instance, you may need individual coverage if you are an unmarried older adult who is self-employed or work for a small business, which is less likely to offer coverage than are larger companies. You may also need individual health insurance if you are a young adult but you are old to be on your parents' plan, or if you don't meet certain eligibility criteria. Young adults are also more likely to work part-time jobs that don't provide health insurance.