The field of health insurance is in the middle of significant change. Many of those changes are still evolving and their outcomes cannot be determined at this point, but others seem inevitable, such as an increase in the number of individual plans that people will purchase in the coming years.
“Most people have employer-sponsored health insurance because, for a long time, that has been the most prevalent way for them to get health insurance,” says Andrea Gioia, executive director for Product Innovation for UPMC Health Plan. “However, the number of people with individual plans is increasing, and insurance plans are responding to that.”
Smart Business spoke with Gioia about individual plans and how they are becoming a part of the changing health insurance market.
Why would someone choose an individual plan over an employer-sponsored plan?
In group coverage, by definition, you have a one-size-fits-all type of plan. Depending on your situation, you may have to pay for coverage that you do not need, or you may not have specific coverage that you do need. Also, with an employer’s plan, once you leave your job, you also leave your health insurance, but you can take an individual plan with you wherever you go with your career.
Group plans do not have the flexibility to offer a customized plan because the provisions of the policy are negotiated between the insurer and the employer, and deductible amounts and co-payment percentages are determined in advance. With an individual plan, you have the option to select different cost shares and you can choose to have certain provisions included or excluded from your policy.
Another reason for increased demand for individual plans is tied to the economy. There are more people unemployed these days, more people self-employed and an increase in the number of smaller employers that are choosing not to purchase health insurance for their employees. This situation is resulting in more interest in individual plans.
What should someone look for when purchasing individual plans?
One of the advantages of getting an individual plan is that you can have a health care policy that better fits your specific needs. To do so, however, means that you need to find the plan that makes the most sense for you and for your specific health situation. With an individual plan, you can have direct control over your policy and its benefits. You can choose to have certain provisions included or excluded, and you can choose your deductible amount and the cost of co-payments.
You should also be sure to choose a plan that enables you to choose the hospitals and doctors you want. Some individual plans do not offer maternity or behavioral health benefits, so if those things are important to you, you should look for them. In all plans, however, preventive care is covered in full.
What is the downside of individual policies?
The biggest disadvantage can be the price. Individual policies can be very expensive, especially if you have high-risk potential or pre-existing health problems. Before issuing an individual health care insurance policy, the insurance company asks you to complete an application about your personal health history.
It is possible that you could be rejected for pre-existing conditions such as congestive heart failure, Parkinson’s disease, or cystic fibrosis. Check with your insurer to see what pre-existing conditions will be denied.
How many different kinds of coverage are there?
There are normally five choices for individual health insurance coverage. They are the traditional fee-for-service, a health maintenance organization (HMO), a preferred provider organization (PPO), a point of service plan (POS) and an exclusive provider organization, or EPO.
How does a consumer know which one to choose?
A high-deductible PPO plan that is compatible with a tax-advantaged health savings account is often the best option for people who do not have many doctor visits in a year but who still want major medical coverage. For those who want more comprehensive individual health insurance coverage, a PPO, or EPO plan with a lower deductible, might be preferable. Routine doctor’s office visits and preventive care are covered, and your co-payment can vary depending on the plan you choose.
In some ways, you can shop for insurance plans much like you shop for other major purchases. Compare the types of plans available, compare the rates and compare the coverage and benefits. Doing so will allow you to find the plan that best fits your health needs.
Will individual plans replace employer group plans?
Despite the changing marketplace, it is unlikely that individual plans will supplant employer group plans anytime soon. Employer group plans continue to be the most popular, in large part because they offer the most comprehensive coverage, both because they are largely subsidized by the employer and because there are tax breaks associated with them. For the consumer, such plans are generally less expensive than individual plans, and that will continue to make them a popular choice.
ANDREA GIOIA is executive director for Product Innovation for UPMC Health Plan. Reach her at (412) 454-8293 or [email protected]