Consumer Guide to Individual/Family Health Insurance

What is individual health insurance?

Individual health insurance is, quite simply, coverage that an individual purchases for himself and/or his family. The Affordable Care Act (ACA) has made significant changes to how individual insurance policies are rated and the benefits that these policies provide. Individual insurance policies and provisions are also regulated by the state where the policy is purchased.

Individual policies are often purchased with the advice of a professional insurance producer due to the complexity of coverage offerings and the premium cost. With the advent of the ACA, a professional insurance producer’s expertise may be even more critical since insurance policies have changed so dramatically.

Whether or not a person has a pre-existing medical condition is no longer a factor when purchasing individual coverage. Since a person’s medical condition is not a factor, individuals are limited to certain times when they can enroll in coverage. A person must enroll during an open enrollment period to gain coverage for the year. There are limited opportunities to purchase coverage at other times during the year as a result of a special enrollment right.

Individual insurance policies may be purchased through an exchange or “marketplace” or they may be purchased outside of the exchange. Irrespective of whether a policy is purchased inside or outside the exchange, polices must cover the same set of Essential Health Benefits. The richness of the benefits under the plan is defined by a metal tier. These tiers are based on the percentage the plan pays of the average overall cost of providing essential health benefits to members:

  • Platinum plans are the most generous and more expensive. These are designed to pay as much as 90% of medical expenses
  • Gold plans are designed to pay 80% of medical expenses
  • Silver plans are expected to pay 70% of medical expenses
  • Bronze plans are expected to pay 60% of medical expenses.

It’s important to note that the metal tiers reflect what the plans will pay on average. These percentages are not the same as coinsurance, which calls for an individual to pay a specific percentage of the cost of a specific service.

Source: NAHU, National Association of Health Underwriters