Simplifying Your Search for Individual Health Insurance
If you are self-employed, retired, or have been unable to find a suitable health insurance plan on national or state-based exchanges, purchasing an individual health insurance plan may be the best choice for you and your family. In 2023, more than 2.5 million Americans fell into the “off-exchange” category, with coverage purchased directly from a carrier, agent, or broker.
Each state has a different set of insurers and plans, and finding coverage that caters to your needs can take considerable time. Fortunately, there are ways to simplify your quest for the right plan.
What is an individual health insurance plan?
Simply put, an individual health insurance plan is a plan you purchase independently. Such plans provide coverage for a single individual or a family, which can be purchased through an insurance broker or an insurer. Modern individual health insurance plans offer a wealth of essential benefits, such as preventative and maternity care, and insurance companies cannot deny you coverage due to a preexisting health condition. Insurers are also prevented from “capping” the number of benefits an enrollee can receive during their lifetime.
Categories of health insurance plans
When shopping for an individual health insurance plan, you must consider the amount of coverage you and your family will need. The government places all health insurance plans into one of four “metal” categories, each covering a different percentage of medical costs. From least to most expensive, these categories are:
- Bronze: Insurer pays 60 percent of medical costs; enrollee pays 40 percent
- Silver: Insurer pays 70 percent of medical costs; enrollee pays 30 percent
- Gold: Insurer pays 80 percent of medical costs; enrollee pays 20 percent
- Platinum: Insurer pays 90 percent of medical costs; enrollee pays 10 percent
Although less expensive, bronze and silver plans often have higher deductibles (the amount you must pay before coverage begins). Gold and platinum plans tend to have lower deductibles but higher monthly premiums.
If you or a family member visit the doctor frequently or suffer a chronic illness, you may save more by enrolling in a gold or platinum plan. Since they usually have lower deductibles, you can access your actual coverage quicker.
Types of coverage networks
Health insurance plans offer one of four different types of coverage networks.
- EPO (Exclusive Provider Organization): Only network physicians and facilities will provide medical coverage.
- HMO (Health Maintenance Organization): As their name suggests, HMOs focus more on preventative care. Enrollees must utilize a network of physicians and facilities, usually limited to a particular geographic area. A referral is usually required to see a specialist.
- POS (Point of Service): Enrollees pay less if they utilize the provider network, but they can see outside providers for an additional cost. A referral to see a specialist may or may not be required.
- PPO (Preferred Provider Organization): Enrollees pay less if they use the provider network, and seeing a provider outside the network costs more. However, a referral is usually not required to see a specialist.
If you prefer to visit a certain doctor or facility, you should probably consider enrolling in a POS or PPO plan.
Paying for coverage
Everyone who enrolls for an off-exchange insurance plan covers the full cost without the benefit of employer subsidies or government tax credits (available for on-exchange plans). However, those covered by some high-deductible plans in the bronze and silver categories could open and fund a health savings account (HSA) to help cover qualified medical expenses. My colleague Tim Amen, CFP®, has compiled a comprehensive white paper on HSAs that offers how these accounts work and the eligibility, contributions, and distributions requirements.
Are you looking for advice specific to your situation? Contact our team to learn more about your coverage options and get help evaluating specific health insurance plans.
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