How to Purchase Health Insurance Plans and Coverage
The two main ways that people obtain health insurance coverage are by paying into a group health insurance plan or buying an individual health insurance plan.
Group Health Insurance Plans and Coverage
Most Americans get health insurance coverage through their jobs or are covered because a family member has health insurance at work. This is called group health insurance. Group health insurance plans are generally the least expensive kind because, in many cases, the employer pays part or all of the health care costs.
Some employers offer only one group health insurance plan. Some offer a choice of group health care plans, such as:
- Fee-for-Service Health Plans
- HMO: Health Maintenance Organizations
- POS: Point-of-Service Plans
- PPO: Preferred Provider Organizations
Employers with 25 or more workers are required by Federal law to offer employees the chance to enroll in an HMO.
What happens if you or your family member leaves the job? You will lose your employer-supported group health insurance coverage. It may be possible to keep the same health insurance policy, but you will have to pay for it yourself. This will certainly cost you more than group health insurance coverage for the same, or less, protection. A Federal law makes it possible for most people to continue their group health insurance coverage for a period of time. Called COBRA (for the Consolidated Omnibus Budget Reconciliation Act of 1985), the law requires that if you work for a business of 20 or more employees and leave your job or are laid off, you can continue to receive health insurance coverage for at least 18 months. You will be charged a higher premium than when you were working.
You also will be able to receive health insurance under COBRA if your spouse was covered but now you are widowed or divorced. If you were covered under your parents' group health insurance plan while you were in school, you can also continue in the plan for up to 18 months under COBRA until you find a job that offers you your own health insurance.
Not all employers offer group health insurance plans. You might find this to be the case with your job, especially if you work for a small business or work part-time. If your employer does not offer group health insurance, you might be able to obtain group health insurance coverage through membership in a labor union, professional association, club, or other organization.
Individual Health Insurance Plans and Coverage
If your employer does not offer group health insurance coverage, or if the group health insurance offered is very limited, you can buy an individual health insurance policy. You can purchase individual health insurance plans with fee-for-service, HMO, POS, or PPO protection. However, you should compare individual health insurance plans carefully because individual health insurance coverage and costs vary from provider to provider. Individual health insurance plans may not offer benefits as broad as those in group health insurance plans.
If you purchase a non-cancelable individual health insurance policy (also called a guaranteed renewable policy), then you will receive individual health insurance under that policy as long as you keep paying the monthly health insurance premium. The insurance company can raise the cost, but cannot cancel your coverage. Many health insurance companies now offer a conditionally renewable policy. This means that the health insurance company can cancel all policies like yours, but not only yours. This protects you from being singled out. But it does not protect you from losing health insurance coverage.
Some tips when shopping individual health insurance plans and coverage:
- Shop carefully. Individual health insurance policies differ widely in coverage and costs. Contact different health insurance companies, or ask your health insurance agent to show you policies from several health insurers so you can compare them.
- Make sure the individual health insurance policy protects you from large medical costs. Read and understand the health insurance policy. Make sure it provides the kind of health insurance coverage that is right for you. You do not want unpleasant surprises when you are sick or in the hospital.
- Check to see that the health insurance policy states: the date that the health insurance policy will begin paying (some have a waiting period before health coverage begins), and what is covered or excluded from coverage.
- Make sure there is a "free look" clause. Most health insurance companies give you at least 10 days to look over your health insurance policy after you receive it. If you decide it is not for you, you can return it and have your health insurance premium refunded.
- Beware of single disease health insurance policies. There are some health insurance polices that offer protection for only one disease, such as cancer. If you already have health insurance coverage, your regular health insurance plan probably already provides all the coverage you need. Check to see what protection you have before buying any more health insurance.
Before you buy any health insurance policy, make sure you know what it will pay for... and what it will not. To find out about individual health insurance plans, you can call health insurance companies, HMOs, and PPOs in your community, or speak to the agent who handles your car or house insurance. You can also find and compare plans online.