When people lose their jobs due to economic slowdown—aka the current recession—they often lose their health insurance as well. The government requires that you be given the opportunity to continue insurance through COBRA, but usually people decide pretty quickly that paying the entire group premium themselves (the reality of COBRA) is an alternative they can’t afford. Rather than do without health insurance altogether, people look for private insurance at the lowest possible rates.
If you no longer have group coverage, you will need to examine all of your insurance needs, meaning health, life, long term care, and even your retirement investment plans. However, health care insurance products are probably the most difficult for people to understand and certainly the cause of the most frustration. For one thing, many health care plans exist, many of them offered by companies that claim to be negotiating discounts with your doctor or refunding your cost after you pay the bill (referred to as “indemnity.”) Some of these plans are genuine, but many are scams or, at best, plans your doctor won’t accept even if they are legitimate. Be aware that if you want real health “insurance,” also regarded as “creditable coverage,” there aren't really all that many different companies out there. Some of the companies offering cheap health plans are not offering true health “insurance.” There is a big difference, and one that you should make sure you understand before handing over a check.
Personal health insurance may not seem as "low cost" because most people who have had years of experience under a group plan never really knew how much the insurance actually cost the employer. The premium that was deducted from your paycheck, along with your deductibles and copayments, was actually only a fraction of the actual cost. Your employer paid the biggest portion of your premium in spite of the fact that you and everyone else probably grumbled every year if your share of the premium or your deductible was increased. However, you couldn't be turned down or rated up just because you had more illness than someone else at the company.
Individual health insurance works differently. It generally can’t be terminated just because you use it, but you can be turned down in the first place if you do not pass health underwriting; you can be rated up if you have a history of illness or obesity; and your premiums can be and often are increased if you suddenly have a major illness. Your premium will be higher than it was under group coverage, and you can expect to purchase riders for “controllable conditions” such as pregnancy that are generally not covered under the definition of insurance. You will have increases every year based on your own age, not on the average age of a group.
Understanding deductibles and copays.
Now that we have covered the “bad” news, we can tell you that it is possible to find reasonably priced health insurance as long as you take a few steps that you might not have given a second though under the group plan. First, make an effort to maintain good health. If you keep your weight down or get involved in a weight loss program, quit smoking (or don’t start if you haven’t), and eat a healthy diet heavy on fruits and vegetables, you may be able to avoid getting sick and thus may qualify for lower premiums on your insurance.
If you purchase traditional insurance, you will have an out of pocket max and deductibles just as you did under group insurance. However, you can control your premium by choosing a higher deductible and a higher out of pocket. If you only see your doctor for an occasional checkup, you can save premium dollars by paying for “well-care” yourself and purchasing an insurance policy that will only pay if you have a hospital confinement due to accident or illness.
An alternative for those with health problems
If you have some chronic health problems, you may find it impossible to purchase traditional health insurance or it may be priced outside of your budget. In these cases, you may want to consider a health care plan such as a PPO or HMO. Known as “managed care,” such plans are pre-paid health care and are not technically insurance. However, usually they are considered creditable coverage and often have lower premiums than traditional insurance. Most major health insurance companies offer managed care options.
If all other alternatives have been exhausted, having a discount plan, a fraternity plan, or an indemnity plan is certainly better than nothing at all. Discount plans work by negotiating with health care facilities who agree to take a smaller fee from you in return for a membership stipend from the health care company. Doctors have to join the plans and agree to accept your payment. Before accepting such a plan, talk to your doctor and hospital to see what discount plans are recognized in your area.
Indemnity plans are plans of last resort, but as long as you have a reputable company, they can give you a little peace of mind. They work by refunding you according to a schedule for any listed treatment that you might undergo. At one time, these plans only paid for accidents, but today many of them pay for illness as well. Whether or not the doctor accepts the plan is irrelevant (most of them don’t) because the plan refunds payment directly to you.
Be aware, however, that you usually will not be refunded 100% of your cost. Still, the plans are relatively inexpensive and do put a little money in your pocket if you need health care outside of group coverage.
When looking for individual health coverage, it is extremely important to work with a reputable company with a proven track record. Our service only works with companies that are believed to be legitimate. To receive up to 5 comparison, health plan quotes, please fill out the easy quote request form.