Commonly Asked Questions About Individual Health Care Insurance

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Why are the premiums for individual health care insurance less affordable than premiums for group plans?

They aren't really. It just seems that way because when you are in group insurance, your employer is paying most of the cost. In a very large group, the cost per person averages out to less per person than it does for small group insurance, but your employer would tell you that the cost of providing health insurance is still one of the highest overhead items your employer pays. Individuals who spend their entire lives in a group simply don’t get exposed to the actual cost.

Are pre-existing conditions considered when going from group health insurance to individual health insurance?

Yes, they can be, although it varies by state. Most states have a rule that if you are moving from one group program to another--say, as a result of changing jobsyou will not be subjected to a pre-existence clause as long as you do not go more than 63 days without coverage. However, when you go to private insurance, that rule may not apply. Consequently, if you have a pre-existing condition, you may have to wait for a year or more before that condition will be covered.

Can coverage be refused?

Yes, it can. Unlike group health in which coverage is guaranteed, companies providing individual health can refuse to provide coverage if you have certain medical conditions. They can also give you an exclusion for coverage of certain conditions. For example, if you have EVER had any kind of coronary procedure, a company may put an exclusion for coronary artery disease in the policy. This would mean that if you ever had a hospitalization or new procedure involving or necessitated by coronary disease, the expense would not be covered.

How can I get the lowest possible premium?

There are several ways to keep the premium relatively low. The first is to quit smoking (if you do smoke) and to try to maintain an excellent health profile. Companies assess your risk based on your doctor’s report. You are likely to be put in a lower risk pool if you are in good health.

You can also choose from several different types of health insurance. The traditional health insurance where you simply go to any doctor you choose and the insurance pays most of the bill is the most expensive. You can lower your costs by choosing an HMO or PPO which require that you participate in a network of doctors who have agreed to accept the insurance (along with your copay) as payment in full. Many of these doctors are also being paid by the insurance company simply for being in the program. The end result is that the company can afford to give you a lower premium.

Finally, if you are reasonably good health, consider taking a higher deductible and refusing coverage such as dental or vision. The higher deductible lowers your premium and also gives you the option of setting up an HSA. Unless you have children who are going to need orthodontics, you can usually self-insure for dental work, creating a premium savings of $10 to $15 per month.

Can I get Insurance that will pay 100% of the bill?

Not usually. Even traditional insurance will usually have a copay or co-insurance as well as a deductible that you must pay before the insurance will pay. Some policies have itemized deductiblesfor example, the first $50 on medication or the first $500 in office visits. If deductibles are itemized in this manner, the deductible for one expense will not apply to another expense.

Will my premiums increase?

Yes. Premiums usually go up every year based on your age. Some companies also move you into a higher risk pool if you suddenly have a series of major illnesses. This practice can result in multiple increases within the year. Check out the company first and see if you can get a policy that guarantees no increase on the basis of usage.

What can I do if the company refuses to pay?

If you have an expense that you believe the company should have paid, you have the right to appeal. You will be provided with details of the appeal process for the company once you have the policy. You need to go through the appeal process first. If you do not receive satisfaction, you can then send the appeal and the answer from the company to your state insurance commissioner for additional review. Your insurance commissioner has the right to decide if the company acted appropriately on your behalf.

What is meant by “reasonable and customary”?

Companies use a schedule that varies from one region to another. They pay a doctor based on the average cost of a given procedure in a particular locality. For example, the cost of a hospital procedure might be much higher in a New York City hospital than in a smaller city in a mostly rural state. Thus the company would expect to pay more.

Can the coverage be cancelled if I get sick?

Most creditable insurance policies contain a “guaranteed renewable” clause. This simply means that as long as you pay your premium, you cannot be canceled regardless of how much you use the policy. You can, however, experience a rate increase.