Individual Medical Insurance

Home Lifestyle Buying Food and Health Individual Medical Insurance

Approximately 5% or 14 million Americans have purchased individual medical insurance. Compare that to the estimated 170 million Americans who access their health insurance benefits through an employer-sponsored medical insurance plan.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) created the guarantee issue of group medical insurance for groups with 2-50 employees. Furthermore, HIPAA created the guarantee issue portability provision for individual medical insurance in the event an individual exhausts their COBRA coverage or loses their individual coverage as a result of a carrier becoming insolvent. Pilot programs of Medical Savings Accounts (MSAs) were also created for self-employed individuals and small group employers 2-50. Why is it important to mention HIPAA and understand HIPAA? Since full implementation of HIPAA the following has incurred in the individual medical insurance market:

• Premiums are often less than group medical insurance (dependent on the employer's contribution) plans.
  
  
• Adverse selection in the small group insurance market.
  
  
• Stricter underwriting guidelines in the individual market.
  
  
• More Americans are uninsured.

When shopping to purchase individual medical insurance, understand that the coverage is not guaranteed! In most states, carriers may deny or reject individuals and or families based on medical conditions. Currently, 20 states have either mandated or an insurance carrier voluntarily issues guaranteed issue individual coverage. Keep in mind that guarantee issue does not mean that preexisting condition limitations may be imposed. Individual medical insurance policies can limit payments for prescriptions, mental health and nervous benefits, home health care, spinal manipulation, rehabilitation services and maternity benefits to identify a few.

Before purchasing any policy, research more than one carrier and more than one insurance broker or agent. Be very leery of an agent who cannot represent more than one carrier. By definition, an agent may only represent one carrier while a broker may represent multiple carriers. Ask the following questions:

• Is the insurance carrier fully regulated by the (states) Department of Insurance?
  
  
• Is the insurance carrier marketing its coverage through an association?
  
  
• What is length of the initial rate guarantee and how often are rate increases and guarantees after the initial guarantee period?
  
  
• What has been the average rate increases over the past two years?
  
  
• What is the projected rate increase over the next year?
  
  
• Do I have a free look period after the policy is delivered to return the policy for a full refund? If so, how long is the free look period?
  
  
• How long has the carrier been marketing in the state?

Certainly, there are several other questions that need to be addressed but those questions will quickly identify the level of skill, understanding and knowledge of the insurance representative you are dealing with. Attempt to locate an agent/broker who is a member of the National Association of Health Underwriters or National Association of Insurance and Financial Advisors. Those agents typically have a designation and are (in general) more current on state and federal legislation. You can look up agents /brokers at nahu.org and naifa.org.

Timothy J. Pitcher is the author of Making Sense of Group and Individual Medical Insurance - A Consumer's Guide Trafford Publishing 2002 ISBN 1-55395-459-9 tjpitcher @comcast.net

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