Having health insurance coverage is an essential part of survival in the modern world. With the always rising costs of medicine and health care, it is nearly impossible to get the medical attention and care you need without being covered by a health insurance plan. In an ideal world, health care would be free. But in this world, the ideal scenario is likely working for a company that includes a comprehensive and cost effective health care plan in their employee benefits.
For those that don’t have this luxury, though, you still need to find a way to get your medical costs and risks insured. It might cost you a nice chunk of change, but it is not comparable to the financial hell you will experience if you end up in a medical crisis without insurance.
A medical insurance plan that you purchase for yourself and not under a company or group is known as individual health insurance. It has many benefits and drawbacks when compared to traditional employer-provided health insurance, which I have laid out in this breakdown.
Benefit – Personalized Plan
When utilizing health insurance that is provided through your employer, you have no choice other than to use the plan and insurance provider the HR department has chosen. While there may be a few different options within your company’s health plan, ultimately your employer will be deciding most of your coverage for you.
When using an individual health care plan, you can pick the company, plan, and details of the coverage. This will allow for much more comprehensive and personal coverage for you and your family. You can find a company that offers a plan most closely fitting your needs, instead of whatever cookie cutter plan your company sees fit.
This will also allow you to seek out a plan which offers a cost most manageable for you. It is obviously helpful when your company covers some or all of your insurance plan, but when seeking out health care independently, you might be able to find a quality plan at a better rate.
Benefit – Easy Transitions
If you are relying on an employer health care plan for your insurance, you will be out of luck if you lose your employment or switch to a different job. While your new place of employment may offer health insurance as well, you may be vulnerable to medical costs in the time transitioning between your two plans.
Under an individual health insurance plan, you will be able to keep the same plan when transitioning to a new job, thus protecting you from any uninsured periods.
Benefit – Cost
Due to new health insurance related laws passed in the fall of 2013, individual health insurance is usually now cheaper than many employee health insurance plans. According to ZaneBenefits.com, the average cost for individual health insurance is 3,080 dollars per year for an individual, and 6,674 dollars per year for a family. According to the same chart, traditional employer insurance costs 5,884 dollars per year for an individual, and 16,351 dollars per year for a family.
While under employer health insurance, your employer purchases your health care plan, and then you reimburse them with money taken out of your paycheck. Individual health insurance, when sanctioned by the company, is simply the reverse of this process. You purchase your own health care plan, and then your employer reimburses you for it through your paycheck. Individual health insurance is a cheaper option even if your company assists with your payments.
Benefit – Premium Subsidies
Under the Affordable Care Act, families which are on an individual health care plan and make up to 400 percent of the Federal Poverty Line annually could be eligible for a financial incentive system known as premium subsidies.
Premium subsidies are essentially a tax credit you receive to ease your health care costs. Employees receiving health benefits will not be eligible for these premium subsidies, unless your health care costs are greater than 9.5 percent of your income, or your benefits cover less than 60 percent of the benefits received by an average worker.
Drawback – Less Coverage
While it is true that an individual health care plan will allow you to better personalize your coverage, the plans offered to those on individual health insurance are often less comprehensive and filled with more restrictions. This increases the chance that you will be left uninsured in the case of an expensive surgery or medical treatment that falls outside the parameters of your individual health care plan. This could end with you unable to get an essential treatment or procedure, or with you fronting an extremely large medical bill.
Drawback – Complications
Hunting down and purchasing your own individual health care plan has the potential to make an already famously complicated process even more exhausting. A managed health care plan that was purchased through your employer is not exactly famous for being “easy.” But when managing the health care yourself, your options are monumentally increased, meaning you are required to have a much greater understanding of the specifics of health care in order to adequately manage your plan.
Your insurance company, knowing that they are dealing with an individual and not a corporation, may also try to make things more difficult for you through complicated paperwork and confusing rules and restrictions, as well as high deductible payments.
Drawback – Restrictions
As we established earlier, individual health insurance plans are cheaper, on average, than employer health insurance plans. This is obviously a good thing, but it also means the company providing your plan will be getting less money from you, and will therefore naturally be less motivated to help you with your coverage.
The more affordable health care plans often come with elaborate restrictions, and not just on what procedures and treatments are covered. Your amount of doctor’s office visits could have a tight limit and you may be required to choose a doctor from a small network determined by the insurance provider as well.
Overall, individual health insurance has both benefits and drawbacks but is likely essential for anyone not receiving health coverage through their employer.