Alliant Health Insurance
Resource

Individual Health Insurance 101

What is individual and family health insurance? A health insurance policy that is applied for and purchased directly by an individual or family, rather than through an employer. The advantages are competitive pricing and portable coverage (not tied to your employer).

Why purchase an individual and family health insurance plan? The purpose of any form of insurance is to transfer risk from the policyholder to the insurance company. People purchase auto or homeowners insurance every day but sometimes fail to realize their financial exposure may become greater due to an accident or sickness. For an affordable price, individuals can pay a health insurance company to assume the bigger risk, just as they do when they buy an auto or homeowners insurance policy.

What needs do individual and family health insurance plans fill? There are typically three types of needs that individual and family plans will fulfill: 1) individual and family health insurance intended for long-term or permanent coverage, 2) short-term health insurance intended for those between jobs, recent graduates, etc., and 3) student insurance for those going to college that are either over-age dependents and no longer qualify to remain on their parent’s group insurance plan or are looking to save on costs with an individual health insurance plan.

What types of individual and family health insurance products are there? There are two main types of individual and family health insurance products: Health Maintenance Organizations (HMO) and Preferred Provider Organizations (PPO).

What is an HMO? Health Maintenance Organizations (HMO) are managed care plans. HMO members typically experience lower out-of-pocket cost, have co-pays for most medical services, and are eligible for annual preventative care. The concept with an HMO is for insured members to select a Primary Care Physician (PCP) and for that doctor to be responsible for the member’s health care and, if necessary, refer the member to a specialist. HMOs have been popular due to their simplicity and economy; generally, there is not as much out-of-pocket cost to the insured and the member rarely receives a bill from providers.

What is a PPO? Preferred Provider Organizations (PPO) are another type of managed care health plan. With a PPO plan, the carrier (health insurance company) has negotiated with medical providers (doctors and hospitals) to give its members discounted rates for services, known as in-network benefits. PPOs will typically provide in-network benefits to insured members at substantial discounts while allowing them to go out-of-network; however, the cost is typically much higher as those providers are not contracted with the health insurance company.

What are HSA-compatible health plans? Health Savings Account (HSA) compatible health plans are high-deductible health plans (HDHP) designed to be set up in conjunction with a Health Saving Account (HSA) should the insured desire to do so. There are several advantages to HSA compatible plans:

  • Monthly premiums are typically lower for HSA-compatible health plans than for traditional PPO plans or HMOs.
  • Health Savings Accounts are not required to be set up with an HSA-compatible health plan. However, when paired, they offer members the ability to save more with tax advantages, an asset that can build over several years, and unused funds roll over each year. Funds accumulated in an HSA account can be used for a host of eligible medical services or to supplement retirement.
  • HSA plans put consumers in better control of how they spend their health care dollars.

What does co-pay mean? A co-pay is usually a fixed dollar amount the insured member pays for a service (i.e., a doctor visit co-pay of $40 or a prescription drug co-pay of $20). Once the member pays the co-pay for services, the health insurance company normally pays the rest of that service.

What does deductible mean? A deductible is an amount the insured member must pay up front for certain services before the insurance company starts participating in the payment for medical services and is typically tied to a calendar year.

What does co-insurance mean? Co-insurance is a percentage that the insurance company and insured member share together once the annual deductible has been met. For example some plans may state the co-insurance is 70%/30% for in-network services. In this example, once the member meets the annual deductible, the health insurance company would start paying 70% of the claim and the member would pay 30% up to their out-of-pocket maximum and then the health insurance company would assume paying most expenses the remainder of that calendar year.

What does out-of-pocket maximum mean? Out-of-pocket maximum is normally the maximum financial exposure an insured member will have in a calendar year. It sometimes includes, or is in addition to, the calendar year deductible. In some cases, certain expenses may not count toward the out-of-pocket maximum (i.e., prescription drug co-pays).

What does in-network and out-of-network mean? In-network doctors and hospitals provide negotiated or discounted rates to health insurance company members. Out-of-network providers are not contracted with the health insurance company, meaning members would not receive discounted rates and would be required to pay more for services.

How would I know which individual and family health plan to pick? There are many options to choose from, and individuals will need to evaluate their budget and needs to select the right plan. Additionally, individuals will need to research which heath insurance companies their doctor is contracted with and what is best for their overall situation. You can start by evaluating the options yourself online or by contacting one of our representatives now.

What are the prices for individual and family health insurance plans? Rates are set by the insurance companies. Our prices are highly competitive and are the same as going direct through an insurance company. Prices will vary based on a number of factors such as age, health history, residential ZIP Code, and type of benefits desired. It is easy to get a quote online by inputting your information on this website, or you can call us to speak with one of our representatives.

California health insurance companies can offer individual health insurance plans at the original rate quoted, a higher rate than originally quoted (due to health conditions of those applying), or if the health history is very poor, the company can decline to offer coverage.

How do you apply for an individual and family health insurance plan? You would complete an application either through a secure online process (which is the quickest way) or you can download, complete a paper application and fax it to us. . You can apply now on this website, or call one of our representatives to discuss the application process.

Since insurance companies have the ability to decline applicants for individual health insurance, they are able to offer more competitive rates to those applicants that do qualify for coverage. The majority of applicants for individual and family health insurance are offered coverage.

What are my options if I am declined for an individual and family health plan? There are a number of solutions for individuals that are declined from the standard individual and family plan health insurance market. If you are a resident of California and most recently have been covered by an employer-sponsored group health insurance plan, either as an employee or have exhausted COBRA continuation within the last 63 days, you may be eligible for a ‘guarantee issue’ individual health insurance plan as a result of the Health Insurance Portability and Accountability Act (HIPAA) that was passed by Congress in 1996. Additionally, most states have health insurance major risk pools that were specifically set up for individuals who cannot qualify for standard individual and family health insurance plans. We can help you sort through the options if you are declined for standard individual and family health insurance. Please see the resources on our website or call a representative now.

 

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