Buying Coverage on Your Own
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From the previous article, we discussed health insurance coverage for employed people. What if you work for a company that does not provide group health insurance? Or you’re self-employed? Or un-employed? There’s no way around it: buying health insurance on your own means you’ll face some hefty bills. Sadly, there is simply no such thing as a bargain individual health policy. At least not yet.
When it comes to forking over cash for your own individual health insurance policy, the first thing you must do is figure out how much coverage you truly need. When buying health insurance, as with any kind of insurance, you should insure only against losses that you couldn’t absorb without derailing your family’s finances. Remember: there’s a seesaw effect between deductibles and premiums. The higher the deductible you choose – meaning the more you’re willing to pay out of pocket – the lower your premium will be. The lower the deductible, the higher the premium. It’s a waste of money to pay high insurance premiums for costs you could handle yourself without too much pain.
Your primary concern, then, should be catastrophic coverage. That is, if you’re hit by a car or develop cancer and rack up total medical cost of %500,000, you want to make sure that your insurance will puck up as much of that staggering amount as possible. So buy a health insurance policy that has a maximum annual payout of at least $500,000 or (preferably) $1 million, It should cover the full cost of basic hospital services and surgery as well as most doctor bills and prescription drug costs. Also make sure never to buy a policy without a ceiling on your out-of-pocket expenses ($2,500 per year is typical). After you reach the ceiling amount, your insurer should pick up 1000% of remaining bills. Finally, make sure the policy you buy is guaranteed to be renewable. That way the insurer can’t cancel your policy just because your health deteriorates.
If you’re turned down by a number of insurers because you have a preexisting condition such as diabetes or heart disease, check out your local Blue Cross/Blue Shield. These nonprofit insurers often have open enrollment periods when they take all applicants, regardless of their health. And they charge pretty much the same rates for every one of the same age and sex in the same area. Another possibility is a health insurance pool for the “uninsurable” available in about half the states. The downside: you’ll probably pay premiums about 50% higher than normal, with a deductible running into thousands of dollars. But at least you’ll be covered.
One of the scariest experiences of people changing jobs or leaving the corporate world is the prospect of losing health coverage. If you’re unsure whether you’ll have health insurance in your new position, tell the benefits department of the company you’re about to leave that you’d like to extend you old coverage under the terms of the Consolidated Omnibus Reconciliation Act (COBRA). As long as the company you are leaving has 20 or more employees, COBRA guarantees you the right to continue your health insurance coverage for up to 18 months, at the same group rate. The will give you plenty of time to shop for an affordable, longer-term policy. Unfortunately, although your employer probably paid for much of the premium while you worked there, under COBRA you must pay the total cost of the premium yourself. Still, it’s certainly cheaper than any plan you could buy on your own. Even if your new job offers health insurance, extend your coverage under COBRA for a few months anyway. Reason: Many employers’ health coverage doesn’t go into effect until you’ve been working there for three months or so.
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