Choosing an Individual Health Plan
by Tamara Quiram

With fewer companies offering health insurance to their employees, more people are turning to individual health plans to protect themselves and their families. These plans are offered by many health insurers, including the most recognizable names in the industry. But all plans aren’t created equal.

Plans vary by more than just cost. Some plans cover catastrophic events, while others focus on day-to-day expenses. Some replace major medical plans. Others just help you get through a tough spot. How do know what’s right for you? Following are some tips for picking the best plan for your needs.

1) Take care of yourself. Unlike group health plans, individual plans are underwritten based on your health status. As a result, your costs are lower if you take better care of yourself. For example, nonsmokers pay less under an individual plan than smokers. Some people may not be eligible for individual insurance because of risky behaviors or chronic disease. Keeping yourself in good shape is the single most important thing you can do to maintain your health care options. It’s like the difference between someone with a good driving record searching for car insurance vs. someone with a lot of tickets or accidents. Premiums vary by age, gender and location. It’s important to disclose any preexisting conditions during the application.

2) Inventory your assets. Do you have enough cash on hand to cover your first $5,000 to $6,000 in health care expenses? If so, you might want to choose a high-deductible health plan. With these plans, the premiums are lower and you can add a health savings account to take advantage of tax-deferred savings. However, if you don’t have enough cash on hand to cover a higher deductible, you’ll want to consider a plan with a lower deducible, even though the premiums are higher.

3) Weigh risk vs. cost. Insurance is really about peace of mind. If you’re not comfortable taking some risk, then you’ll want to choose a plan that provides coverage against catastrophic events.
In contrast, if you’re young, healthy and on a budget, then you might want to consider a less comprehensive plan. Annual maximum plans, for example, may allow you to select a $1,000 deductible plan for about the same premium as a much higher deductible major medical product. However, there’s a limit to how much these plans cover in a year, typically around $100,000 to $250,000. The cost of treatment for most conditions will fall below the annual maximum. If the cost of treatment exceeds the annual cap, then you’ll pay for the cost of additional treatment during the remainder of that calendar year.

Once again, it all depends on how much risk you’re willing to shoulder.
4) Consider your timeframe. If you’re likely to need individual insurance for a long time, like a small business owner, then you’ll want a plan that renews annually. But if you’re in need of coverage for less than one year because you expect to be eligible for a group plan soon, you might want to consider a short-term medical plan. Short-term medical is designed for people in transition. It essentially provides you with a bridge until you’re able to get a more comprehensive plan, through your employer or Medicare.

With short-term medical, applicants can choose the length of their policy (typically up to a year), the deductible and the payment method. These plans are also notable for their easy application process and quick issue.
5) Look before you leap. Free quotes on individual health plans, make it easy for you to compare plan design and costs. One word of caution: Always make sure you’ve been accepted into a new plan before cancelling your old one. You don’t want to be uninsured.
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Based in Waukesha, WI, Tamara Quiram is a director with Humana’s individual health business, HumanaOne. Quiram has been with Humana in various underwriting and financial functions since 2002. In her current role, her responsibilities include developing financial reporting procedures/processes and creating key metric reports. Before coming to Humana, Quiram worked at Independent Care (iCare) and American WholeHealth Networks Inc. (AWHN).