Last posted at aarp.org
Most Americans receive their health insurance through an employer-sponsored plan. But people who are self-employed, work part time, aren’t working or work for a business that doesn’t provide health coverage are typically on their own.
People in these types of situations often turn to individual health insurance plans — insurance they buy themselves.
Many insurers sell individual health insurance plans. But if you’re 50 and older, but not yet 65 and old enough for Medicare, actually getting an individual insurance plan can be a challenge:
- You may find it harder to find a company that will sell you a health insurance policy, especially if you have a serious medical condition.
- You may have to undergo a medical exam to prove you are healthy and insurable.
- You may find that individual insurance costs more than group insurance.
- You may be provided with fewer benefits than you would through a group insurance policy.
If you’re buying health insurance on your own, it’s important to shop around and compare health insurance policies and plans.
A first step could be to find out which plans are offered where you live. (Insurance offerings do vary by state.) Then, you can look for insurance that will give you the best health coverage for you and your family. A useful source for researching your health insurance options is HealthCare.gov.
The answers to the following questions can help you compare both the cost and the benefits of the plans you might consider:
- How much of my doctor and hospital bills will this health insurance plan pay for?
- How much will I have to pay each month in premiums for this plan?
- How much will I have to pay as a deductible before the plan begins to pay?
- How much will I have to pay for office visits to the doctor?
- Does this plan pay for preventive health care (such as screenings for cancer) or vaccines (such as a flu shot) to prevent illness or disease?
- Does the plan have rules for people who already have serious, chronic medical problems? Will these rules keep me from getting the care I need? If so, in what way?
- What services are covered by this health insurance? For instance, does the plan cover routine surgery, hospital stays, doctor visits, nursing home stays, home health care, and medical equipment and supplies?
- Will the plan pay for care at a hospital emergency room or urgent care center?
- Does the plan include vision care?
- Does the plan include dental coverage?
- Does the plan cover prescription drugs?
- Does the plan pay for catastrophic medical costs?
- Is there an out-of-pocket limit to how much my annual costs could be?
- Is there a yearly or lifetime limit to how much the plan will pay for my medical costs?
- Are there providers and specialists where I live who will accept this plan?
A fee-for-service insurance policy (also called indemnity insurance) is a traditional form of health insurance. It pays a part of each medical service you receive, such as a doctor visit or hospital stay; you pay the rest of the cost.
With a fee-for-service plan, you can go to any doctor or hospital you choose. But you usually pay a higher monthly cost for your medical care than if you were part of a managed care plan.
Managed Care Plans
Many people receive health care through a managed care plan, such as a health maintenance organization (HMO) or preferred provider organization (PPO.)
In managed care plans, health insurance companies contract with doctors and hospitals to provide health care to its members. These doctors and hospitals make up the plan’s “network.”
It’s likely that you will be able to see only the doctors and hospitals that are part of your plan’s network. Some plans, like PPOs, do allow the use of doctors and hospitals outside of the plan network, but you usually pay more.
In managed care plans, your visits to the doctor are prepaid by the plan. You typically pay a copayment, for example $20 to $35, each time you visit a doctor.
Association-Based Health Insurance
You might be able to buy health insurance through a trade or professional association you belong to. Many professional, community and religious organizations offer their members health insurance coverage at group rates. If you are a member of any trade or professional association, ask if it offers health insurance coverage. If it does, find out:
- How complete the coverage is
- How much of your medical expenses — from routine doctor visits and prescription drugs to major surgery — the insurance will cover
- How much it will cost each month
- If it covers family members
Your state insurance department can tell you what your rights are under association-based health insurance plans.
Pre-existing Condition Insurance Plans
As a result of the new health care law, the federal government has established pre-existing condition insurance plans (PCIPs) in every state.
In general, to get health insurance through a PCIP, you must:
- Have been uninsured for at least six months
- Have a pre-existing condition
- Have been denied health insurance coverage because of your health condition
- Be a U.S. citizen or national, or be lawfully present in the United States
PCIPs operate until January 2014, when small businesses and people without group health insurance will be able to find coverage through state-based health insurance purchasing pools called “health insurance exchanges.”
Health Insurance Brokers
If you are having a hard time finding insurance, or can’t decide which insurance plan is best for you, you might want to consult with a health insurance broker.
An independent broker sells many different kinds of health insurance. Other brokers sell plans from just one company, so it’s best to talk to a few such brokers before choosing one. Be sure you understand how the broker is paid — whether you pay or the insurance company pays the broker a commission. The compensation arrangement may influence what plan a broker recommends.
If you decide to use a broker, make sure the broker will work in your best interest. Also know that, sometimes, going through a broker costs more than buying insurance in other ways, and that not all insurance products are available through a broker.
Other Types of Policies
Numerous kinds of insurance policies are on the market, including many that should not be mistaken as being a type of comprehensive health insurance.
For instance, specific disease policies, such as “cancer policies,” provide coverage only for a specific disease. Hospital indemnity policies pay you a set amount of money for each day you are in a hospital. These policies may sound good but don’t really help with your overall health care costs.
Another option: A few states require insurance companies to sell health coverage to people who have not been able to get health insurance on their own due to existing health problems. Check with your state insurance department to learn the rules in your state.