Health Insurance Blog

Health insurance is generally available through groups and to individuals. Premiums—the regular fees that you pay for health insurance coverage—are generally lower for group coverage. When you receive group insurance at work, the premium usually is paid through your employer.

Group insurance is typically offered through employers, although unions, professional associations, and other organizations also offer it. As an employee benefit, group health insurance has many advantages. Much—although not all—of the cost may be borne by the employer. Premium costs are frequently lower because economies of scale in large groups make administration less expensive. With group insurance, if you enroll when you first become eligible for coverage, you generally will not be asked for evidence that you are insurable.

(Enrollment usually occurs when you first take a job, and/or during a specified period each year, which is called open enrollment.) Some employers offer employees a choice of fee-for-service and managed care plans. In addition, some group plans offer dental insurance as well as medical.

Individual insurance is a good option if you work for a small company that does not offer health insurance or if you are self-employed. Buying individual insurance allows you to tailor a plan to fit your needs from the insurance company of your choice. It requires careful shopping, because coverage and costs vary from company to company. In evaluating policies, consider what medical services are covered, what benefits are paid, and how much you must pay in deductibles and coinsurance.

You may keep premiums down by accepting a higher deductible.Many people worry about coverage for preexisting conditions, especially when they change jobs. The Health Insurance Portability and Accountability Act (HIPAA) helps assure continued health insurance coverage for employees and their dependents. Starting July 1, 1997, insurers could impose only one 12-month waiting period for any preexisting condition treated or diagnosed in the previous six months.

Your prior health insurance coverage will be credited toward the preexisting condition exclusion period as long as you have maintained continuous coverage without a break of more than 62 days. Pregnancy is not considered a preexisting condition, and newborns and adopted children who are covered within 30 days are not subject to the 12-monthwaiting period.

If you get health care coverage at work, or through a trade or professional association or a union, you are almost certainly enrolled under a group contract. Generally, the contract is between the group and the insurer, and your employer has done comparison shopping before offering the plan to the employees. The individual health insurance market provides coverage to those who do not have access to employer-sponsored group coverage or government-sponsored health insurance.

Unlike the employer group insurance market, purchasers in the individual health insurance market bear the full cost of coverage. For those who are not self-employed, the premiums are not tax deductible.

Individual health insurance policies are required to conform to federal “individual market” rules established by HIPAA, including guaranteed issue requirements for HIPAA eligibles. HIPAA also requires “guaranteed renewability” for all individual policies.

Restrictions on the ability to base premiums on risk, such as community rating and guaranteed issue requirements, increase costs for younger people and people with lower health care risks. As a result, fewer young or healthy people buy coverage and instead choose to join the ranks of the uninsured. As this happens, the average claim cost for those persons remaining in the individual market will rise and, in turn, so will the average premium for all those wanting to purchase coverage.

In most states, a well-funded, appropriately priced high-risk pool provides coverage options to high-risk individuals without placing an undue burden on purchasers of individual health coverage.It is also a good idea to ask for the insurance company’s rating.

The A.M. Best Company, Standard & Poor’s Corporation, and Moody’s all rate insurance companies after analyzing their financial records. These publications that list ratings usually can be found in the business section of libraries.And bearing in mind: In some cases, even after you buy a policy, if you find that it doesn’t meet your needs, you may have 30 days to return the policy and get your money back. This is called the “free look period.”