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Some people cannot access job-based coverage because their employer does not offer it, or because they are self-employed. To obtain health insurance, they must go to an agent and purchase an individual policy. The laws and regulations governing individual policies are very different than those governing job-based coverage. As a general rule, individual policies do not offer anywhere near the benefits and protections one can enjoy through job-based coverage, although this varies based on the state where the policy is purchased.

Overview | Purchasing | What To Look For In Your Policy

When you compare the consumer protections available to people purchasing individual policies to those available to members of job-based health plans, you will see that there are significant .

This is not to say that individual policies are horrible and that no one should ever buy one. For many Americans, individual health insurance coverage is a perfectly viable option. However, because the rules are different and there are fewer consumer protections, it is important for people buying individual policies to be "smart shoppers" who are aware of their rights and protections under the law.

Under individual policies, the following rules apply in most (but not all) states:

  • Guaranteed issue - In most states, applicants can be turned down for coverage based on their health status.
  • Guaranteed renewability - Your health insurance cannot be cancelled if you become sick.
  • Limits on Pre-existing Conditions Exclusions - These limits vary widely depending on what state you live in. In some states, insurance companies can impose exclusion riders that completely eliminate coverage for pre-existing conditions for the entire life of the policy.
  • Portability - Portability requirements vary by state. In some states, you get no credit for prior coverage and must wait out the entire pre-existing condition exclusion period.
  • COBRA continuation coverage - COBRA only applies to job-based coverage

For specific state by state information please go here.

Purchasing Private Health Insurance Coverage

f you do not get your health insurance through your job, you may be able to buy a policy as an individual. Individual coverage is harder to obtain, more expensive, and less consumer-friendly than job-based coverage, but it is better than not having insurance at all. Good health is never guaranteed - even if you do not spend much for your healthcare right now, all it takes is one hospitalization to wipe you out financially.

One way to start your search for an individual policy is by looking for an independent agent. Independent insurance agents must register with your state department of insurance, so they will have a list of people licensed to sell health insurance in your state. You can also visit the National Association of Health Underwriters website to find an independent agent in your state.

Another option is to look for health insurance coverage online which is where comes in. With online quote comaprison services you an obtain custom health insurance quote comparisons from the comfort of your own home without the pressure of having a salesperson in your living room.

What to Look for in Your Policy

Some things to look for in an individual policy:

  • Noncancellable, guaranteed renewable coverage - this means that you cannot be cancelled as long as you continue to pay the premiums and do not try to defraud the insurance company. Sometimes, insurance companies will cancel health insurance policies because the insured becomes sick, in much the same way that auto insurance companies cancel people who have too many accidents. Sadly, this is perfectly legal in many states, so find a policy which is noncancellable and guaranteed to renew each year if you can. The next best thing is to find a "conditionally renewable" policy, which means that the insurance company reserves the right to cancel all policies similar to yours, but cannot single you out for cancellation.
  • A 10-day recission period - Most insurance companies will allow you 10 days to examine the policy documents carefully and decide whether or not you want this coverage.If you decide you do not like the terms of the policy within the 10 days, you can cancel the coverage and get your premium back.
  • Clearly defined terms - you want to know
    1. What is covered?
    2. What is not covered?
    3. Deductible amounts?
    4. When the coverage begins

The level of coverage available under individual health insurance policies varies widely, and you will have more options available to you because your employer is not preselecting certain types of plans for you to choose from. Thus, it is especially important that you understand all of the terms of your individual policy. If they are not clear to you, ask your agent and/or the insurance company to explain them. You do not want to wait until you are sick to discover that your policy does not cover the services you need.


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