How is individual insurance different from group insurance?
Individual health insurance is coverage that an individual purchases for himself and/or his family. Individual insurance policies and provisions are regulated by the state where the policy is purchased. Individual policies are often purchased with the advice of a professional insurance producer due to its complexity.
Individual insurance is very different than group health insurance; since laws mandating what types of services must be included in individual policies are often different than those regulating what must be included in group policies. Benefits are generally less extensive than what most people would receive through coverage they have through a group plan. Since claims can easily outstrip medical claims costs for one individual, insurers "pool" risks (see below) to spread claims losses among all of the members of the pool.
How are premium rates determined?
When determining rates, insurance companies use the medical information on your applications. Sometimes they will request additional information from your physician or ask you directly for clarification. It is in the applicant’s best interests to provide as much information about their medical history and condition as possible so that the premium quoted accurately reflects their health status.
Once the company has determined your health status, you will be assigned a rate class by the company, and put into a pool of other individuals with similar health statuses. Your premium will be the rate charged to that class of customers. Subsequent annual renewal premium rates will be determined not by your individual claims, but instead by the collective claims of the class. Since medical services can be quite costly, the insurance premium for individual coverage is small compared to the amount an insurer may have to pay for claims.
Are any pre-existing medical conditions covered?
Some insurance companies can choose not to offer coverage to people with serious medical conditions. Most Americans don't have perfect medical history and most still qualify for individual coverage. However, there are some individuals who do not decide to purchase health insurance coverage until they know that they have a medical problem that will require them to be insured. Insuring individuals with serious pre-existing conditions is a problem for insurance companies, because it interferes with their ability to spread risk.
Therefore, insurance companies are allowed to look back at your medical history for pre-existing conditions and may choose not to cover certain conditions for a specified period of time. This is known as a waiting period.
A company may offer an applicant with a pre-existing condition the option of a policy at a more expensive rate with full coverage of the pre-existing condition and a pre-existing condition waiting period.
Can I still buy individual insurance if I have a very serious pre-existing medical condition?
You can be turned down for individual coverage if you have a very serious medical condition (usually something chronic and/or expensive to treat, like HIV or cancer). However, California and other states have developed some way to provide uninsurable people with access to individual health insurance coverage. Twenty-seven states provide coverage to medically uninsurable people through high-risk pools. Also, the Patient Protection and Affordable Care Act (PPACA) provides a pre-existing condition insurance plan for states that don't have their own program. Anyone interested in learning more about pre-existing condition insurance can visit PCIP.gov for state-by-state information on pricing, premium and eligibility.
How has PPACA changed coverage for a pre-existing medical condition?
Under PPACA, popularly known as Obamacare, health plans can no longer exclude, limit or deny coverage to a child under age 19 solely on the basis of a pre-existing condition. Beginning in 2014, insurers providing individual insurance will no longer be able to exclude, limit or deny coverage for any individual solely on the basis of a pre-existing condition.
Have more questions regarding individual health insurance? Call us today and one of our Health Insurance Specialists can answer all of your questions.