Health Insurance - Getting a Discount

But if you leave that job � or start another one that doesn't offer health insurance � you may be surprised at just how expensive the same coverage is when you buy individual health insurance. ("Individual" means the insurance is not connected to a business or to the self-employed. You can purchase an "individual" policy that covers your whole family.)

In addition, there are no guarantees that an insurer will take you on. That's because nlike group plans, individual plans are medically underwritten and can decline your business or attach exclusions to your policy. They take into account your past and present health and then factor it into your premium as they see fit.

"The economics are different in the individual market," says Thomas Wildsmith, a policy-research actuary with the Health Insurance Association of America. "Unlike group plans, people in individual plans pay premiums that are more in line with their expected health costs. So the cost will be higher for those who are older or less healthy. "

Crunching the numbers

If you're faced with finding individual insurance, don't let the confusion tempt you to go without. "It's never a good idea to be without protection," cautions David Sterling, president of Sterling & Sterling, an insurance brokerage in Great Neck, N.Y. "When people think about going a few months without coverage, they tend not to consider accidents. As healthy as you are and you feel, you could fall off a ladder or slip in the street. Medical expenses for the unexpected can be quite costly." Plus, you'll lose your preexisting-conditions coverage in most states if you go without insurance for 60 days, he warns.

Finding the right balance of coverage and cost can be challenging, but it's a necessity. So take your search one step at a time. The first step is to evaluate your needs and understand your health-insurance options. For some, that may mean buying COBRA coverage.

Consider COBRA

COBRA is probably best seen as a safety net. "There's a secret to getting the most out of COBRA," Wildsmith advises. "You have 60 days to make a decision about COBRA, and when you do, the coverage is retroactive. So as soon as you know you will be losing your group coverage, start shopping for individual coverage. Since you may not qualify for individual coverage, it behooves you to go out and talk to independent agents who represent different companies. If you find a policy you like, apply for it; you should be able to find out if you are accepted within those 60 days. If you find a better priced policy that meets your needs, buy. If not, go with COBRA."

Wildsmith points out that COBRA covers all members of your family. "For instance, if you find an individual policy that works for you but won't cover your wife's preexisting illness, go with COBRA only for her. You can tailor it somewhat to meet your needs."

A preexisting condition might make finding individual health coverage more complicated � or more pricey � but that shouldn't knock you out of the race completely. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) restricts the ability of insurers to exclude preexisting medical conditions from coverage, and to issue or renew coverage if you were previously part of a group plan. HIPAA kicks in after you exhaust any COBRA coverage, says Wildsmith.

This may ring as warm and fuzzy, but make no mistake about it: There's a bottom line here. "The access to HIPAA is guaranteed; however, the premium may be 25 percent higher than the standard rate for a healthy individual [buying coverage] in the private market. " That's a conservative estimate: A recent U.S. General Accounting Office study found that premiums for individuals eligible under HIPAA can run as high as 140 percent to up to 600 percent above standard rates.

Navigating the individual-health marketplace

Among your choices, you'll find that the individual-health market offers the same plans as the group market, including health maintenance organizations (HMOs), preferred provider organizations (PPOs), point-of-service plans, and traditional fee-for-service arrangements. Your budget, physician preferences, and health requirements will all have a hand in deciding which type of plan is best for you.

Cutting corners

Also, if you prefer certain specialists keep in mind that some plans limit not only visits but also who you can see. "If you like alternative types of care such as acupuncture, massage therapy, or chiropractic, be sure you ask about coverage for these services. They are usually limited or not covered at all," he says. Psychotherapy and other mental-health services will probably have specific guidelines and limitations as well.

Consider your health-insurance goals, if you want a comprehensive plan and don't want a lot of out-of-pocket expenses, an HMO covers you womb-to-tomb very cost-efficiently. But if you are in your 20s or 30s, have no children and some extra money, you can save a great deal by buying a policy that covers only catastrophic illnesses. But you'll have to pay out of pocket for every doctor's visit or throat culture.

Obviously a bare-bones policy is not for everyone. "It comes down to this: Does the person see health insurance as protection, or as something to pay the bills?" says Gurda. Whenever possible, he advises consumers to look for comprehensive inpatient/ outpatient plans with higher deductibles rather than trimmed-down hospital/surgical plans. "True, a hospital/surgical plan might cost 40 percent less, but if you end up in the hospital, the last thing you need is to worry about what's going to happen once you get out of there," he says.

If you are leaning towards a more well-rounded plan, make sure you are getting what you pay for. Read the fine print. Will the plan pay for X-rays even if they turn out to be negative? Will it pay for your doctor's visit if you have the flu? Will it cover antibiotics?

Most consumers seek modest coverage but also want essentials. Typically, when people start paying out of their own pockets for health insurance, they lean towards higher deductibles to save on their premiums. They are less likely to buy ancillary coverage like dental or vision plans, particularly if they can work this care into their annual budgets. Since a deductible usually applies for these plans anyway, there's not much sense in paying 10 to 15 percent just to move the money around. They also tend to buy less generous prescription- drug coverage and preventive-care benefits.

The Agency for Health Care Policy and Research offers guidelines for estimating your future health care costs and comparing several policies. Consider the annual premiums, the deductibles, copayments, annual limits, and maximum out-of-pocket expenses. This should give you a good idea of what your yearly costs will be for each policy. Don't let a " cheap" policy fool you: Make sure you check whether the "best buy" will give you access to the kinds of services you might require.

Join the group

Looking at dividing a family up by having the husband be insured as an employee with his children is a viable option for the self employed. This would reduce the cost for the family.

When self employed, you can often find a group plan with the proper approach. 

Do you have your own business? Does your wife do some bookkeeping for the company? That's a two-person business, eligible for a group rate and a group policy. And keep in mind that self-employed individuals can deduct 45 percent of the cost of premiums from their taxes. Legislation has been introduced that may bring that up to 100 percent in the next decade.

Finding a cost-effective, smart, individual-health policy can be tricky but it's not rocket science. Talk to other people around you who are similarly situated. Do your homework.

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