Rising healthcare costs have made health insurance very important. Most people have access to health coverage plans via their employer or the government. However, in the absence of both these options, one can consider opting for individual health insurance. Curious to know more? Read on to learn more about individual health insurance and whether it’s the right choice.
What Is Individual Health Insurance?
People purchase individual health insurance plans for themselves or their families. They’re different from a government-run program like Medicare or employer group plans. Generally, the following kind of people opt for individual health insurance:
- Self-employed individuals
- Employees of small organizations that don’t provide health benefits
- People who take early retirement and need insurance until they reach age 65
What Is the Affordable Care Act (ACA)?
Before 2014, individual health insurance was less costly than group health insurance. This was due to the following reasons:
- Individual health insurance plans offered less coverage than group plans.
- Individual health insurance plans were medically underwritten in most states. This means that if someone had pre-existing medical conditions, they may not be able to get individual health insurance.
After 2014, the Affordable Care Act brought about certain changes:
- Individual plans have to comply with ACA’s essential health benefits.
- Eligibility for individual plans no longer depends on a person’s medical history or pre-existing conditions.
This has resulted in increased individual plan premiums as high as group insurance premiums.
Where Can One Buy Individual Health Insurance?
Individual health insurance can be bought via the exchange/marketplace in every state. One can enjoy premium subsidies (premium tax credits) and cost-sharing reductions by purchasing through the marketplace. These plans can be purchased during the annual open enrollment period, from November 1 to December 15, every year in most states. The coverage is effective from January 1. Insurance can also be bought during a special enrollment period triggered by a qualifying event. Many states also offer extended enrollment periods that go on till January.
Coverage and plan options vary widely from region to region. Some areas only have one individual health insurance provider, whereas there might be multiple insurers and dozens of healthcare plans available in other regions.
What Determines the Individual Health Insurance Cost?
The monthly premiums for individual health insurance plans vary significantly based on the following factors:
- Applicant’s age
- Zip code
- Whether the applicant smokes
- Health insurance firm
One can also consider short-term health insurance plans as they are typically less expensive than full-price individual ones. However, the latter is affordable for those eligible for tax credits.
