How to Save on Health Insurance, Part 2: Individual Plans
In part one of this series, I examined how people with employer-supplied health insurance can save money and maximize their benefits during open enrollment. But in today's economy, when the unemployment rate is at almost 10% and companies are cutting back on benefits to save money, many millions of people are responsible for securing their own health insurance through individual plans.
"Unlike employer-offered health insurance, individuals can shop for insurance anytime. There's no specific enrollment period," says Michael Mahoney, vice president of consumer marketing at the insurance broker GoHealthInsurance.com. "That said, individuals pay 100% of the cost of coverage, as opposed to sharing that cost with the employer." Selecting an individual plan that both suits your budget and provides adequate coverage can be tricky so I spoke with a few consumer health experts for tips on how to maximize benefits while minimizing costs.
Because there are some similarities between shopping for individual health care and employer-offered coverage, it's worth checking out part one of this series, which provides a few key suggestions including how to educate yourself regarding health care terminology, compare treatment costs, determine your risk tolerance and take advantage of preventative care. Then you can review the list, which is tailored specifically to individual plans.
1. Identify Which Benefits You Need ... and Which You Don't
"There's no right plan for everyone," says Ellen Laden, director of public relations for the individual line of business at UnitedHealthcare (UNH), one of the nation's largest health insurers. "Ask yourself, for example, how often do you go to the doctor? Do you take prescription drugs? Do you have a chronic condition that is being managed? Do you have a physician you see routinely or do you go to clinics? Do you want dental coverage? Or vision coverage? Determine what kind of plan you want, and what kind you can afford. Everybody would drive a Mercedes or a Lexus if they could, but most of us drive a Toyota or take public transportation because it's what we can afford and gives us what we need."
Adds Mahoney, "For example, if you don't plan to have a child anytime soon, you probably don't want a maternity rider. You can add it later. Dental, vision, maternity, life insurance, those are all benefits you can add on later and are all ways to shave a little bit off the cost if you don't need them now."
2. Consider a Short-Term Plan
Short-term plans provide health insurance coverage for a limited period of time, usually one to 11 months -- you select the duration. "They are designed to bridge the gap between your previous coverage and your future health insurance," explains Laden. "Let's say you get laid off, or your COBRA coverage is about to run out, or you just moved to a new city and don't want to be committed long-term to a plan, you could buy one month of short-term or 10 months."
According to Laden, these plans are generally less expensive than longer-term plans, and often times you can reapply for coverage if you want to extend the term. Additionally, "you can drop the coverage at any time, without penalty, and have returned to you any premium that hasn't already been applied to coverage."
3. Be Sure You're Selecting a Reputable Company
Just like any other industry, there are scams and financially shaky businesses in health care, so it's important to do your homework. Once you find a plan you like, make sure the insurer is rated by A.M. Best or another major ratings agency. "Small health insurers go out of business all the time," says Laden. "So do the commonsense stuff too. Ask family members and trusted friends about the companies they use."
4. Understand the Plan You're Buying
"There are all kinds of ways to combine different insurance products," explains Mahoney. "So you need to make sure you don't have any unwanted loopholes in your coverage. But you also want to make sure you don't have overlapping coverage. The last thing you want is to pay twice for the same thing."
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Laden agrees. "Know what you'll be responsible for paying before you sign up. Know what you'll pay and what the insurer will pay. Any reputable company that you would do business with will be glad to answer those questions for you."
Not sure where to go if you have questions about a plan? Most plans have phone numbers posted on their websites. You can also talk with a local, independent insurance broker in your town, or ask the agent who insures your car or home, as they often offer health insurance as well, and may be able to offer a discount for bundling your coverage. Also, online national brokers like eHealthinsurance.com or GoHealthinsurance.com have representatives available to answer your questions.
5. Be Careful About Timing
Before dropping your current plan, make sure you have not only applied for, but have also been approved for it and that the coverage has gone into effect. Otherwise, you run the risk of finding yourself uninsured.
6. Consider a Health Savings Account
Unlike a Flexible Spending Account, the funds of which must to be used up within the year and cannot be transferred between employers, money in a Health Savings Account can be rolled year after year if it's unused. It's a tax-free, interest-bearing bank account specifically for medical expenses, though there are limits on how much money can be deposited -- for 2012, single coverage is capped at $3,100, and family coverage is capped at $6,250 for the tax year. "Health savings account plans let you save on both your health care and your taxes," says Laden. "Particularly for self-employed individuals and their families, that becomes attractive. Another nice thing is that there is one deductible per family. Everybody in the family contributes to that one deductible so that helps you meet it a lot faster in that calendar year."
7. Research Options for Preexisting Conditions
Consumers who have serious illnesses or medical conditions that might prevent them from getting coverage in the individual market today can go to www.pcip.gov and click on their state for the options available to them. As for consumers currently on COBRA who have serious illnesses or medical conditions that might prevent them from getting coverage in the individual market, Laden suggest that they "exhaust their COBRA coverage -- generally 18 months -- to preserve their HIPAA eligibility for coverage, regardless of the cost of COBRA (which, on average, is over $400 per month for an individual and over $1,100 a month for a family). However, they can place other family members in an individual or family plan while they remain on COBRA for the cost savings."
Loren Berlin is a reporter with the AOL Huffington Post Media Group. She can be reached at loren.berlin@teamaol.com, on Twitter at @LorenBerlin, and on Facebook
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