Key considerations in purchasing individual coverage
1) Not all plans provide the same level of coverage. Pharmacy benefits, deductibles, co-pays and even the doctors that
accept the coverage will very from plan to plan. Individuals evaluating any insurance plan should consider the level of
coverage and network before finalizing their decisions.
2) Individual plans are individually underwritten. This means that once you apply for a plan, the carrier will evaluate your
health before approving you for the plan and finalizing your rate. Individuals with pre-existing health conditions, or other
factors, may not qualify for a specific individual plan, or may be offered the plan at a higher premium.
3) Individual coverage is offered prospectively, and coverage will begin on the date the underwriting is finalized and the
premium is paid. COBRA is offered retroactive to the date active coverage is lost. In some instances, it may make sense to
elect COBRA until your approval and pricing for an individual policy is finalized and the policy is in force.
4) Individual policies are not a part of the benefits supported by or endorsed by your former employer's benefits team.
Individual plans have no connection with your former employer.
5) Some states have guaranteed issue plans available, which means that you may be eligible despite pre-existing health
conditions. The premiums for guaranteed issue plans are typically much higher than individually underwritten plans, such that
some people elect to apply for individually underwritten plans before applying for guaranteed issue plans, to see if they can
get accepted into a plan with a lower premium. In many instances, COBRA is less expensive than guaranteed issue plans,
but individual evaluation is recommended. Go to the KFF.org website for additional information regarding state-based
guaranteed issue plans.
6) Some individual policies may include access to or funds deposited into a health savings account. Health Savings Accounts
are tax-advantaged medical savings accounts available to taxpayers in the United States who are enrolled in a High
Deductible Health Plan (HDHP. The funds contributed to an account are not subject to federal income tax at the time of
deposit. Unlike a flexible spending account (FSA), funds roll over and accumulate year to year if not spent. HSAs are owned
by the individual. HSA funds may currently be used to pay for qualified medical expenses at any time without federal tax
liability or penalty. However, beginning in early 2011 OTC (over the counter) medications cannot be paid with HSA dollars
without a doctors prescription
This law provides certain former employees, retirees, spouses, former spouses and dependent children with the right to temporary
continuation of health coverage at group rates. Generally, COBRA participants pay the entire premiums themselves. Visit the Department
of Labor Web site for more information.
Shop for an individual policy
In some cases, it makes sense to buy an individual policy. You may not be aware that you have the option of purchasing individual
health insurance coverage as long as you have 18 months of creditable coverage without a break in coverage of 63 days or more. To
leave this site and visit an independent broker of health insurance plans, click here.
State program
Those losing group health coverage may be able to special enroll in a state-run group health plan in some states. For a State COBRA
Law Directory, click here.
Spouse's plan
You may choose to be added to your spouse's group health plan, if available. Be advised that this will likely involve a wait period
until the next enrollment date comes up.
Combination
One option is to select COBRA to ensure that you are covered, even if you plan to explore other insurance options. Since not everyone
qualifies for every individual health insurance plan, selecting COBRA ensures you remain covered in the event you are turned down for
individual health coverage.
