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Tips for finding the right individual health insurance plan

In a tough economy, losing your job is scary. But it’s even worse if your group health insurance coverage disappears, too.

Fortunately, you can buy coverage for your family through an individual health insurance policy. Such insurance typically is less expensive than opting for COBRA plans that temporarily extend the health coverage you had through a previous employer.

If you’re shopping for an individual policy, it’s important to balance costs with health care needs, says Cheryl Fish-Parcham, deputy director of health policy at Families USA, an advocacy group for health care consumers.

individual-health-insurance-policy“You need to be sure that the plan will cover care you might need,” she says. “Keep in mind how much you might still need to pay for that care, as well as your premium costs.”

Here are some tips for finding the right health insurance coverage for you and your family.

How to shop for a plan

Shoppers can begin looking for a plan in a couple of ways, says Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, a trade group for health insurers. They can reach out to local health insurers, he says, or they can seek out a health insurance agent or broker.

If you choose the latter route, make sure the agent or broker is licensed by your state. Your state health insurance department can provide that information.

If you prefer a do-it-yourself approach, online resources can be a big help. Some websites compare quotes and sell insurance. Others provide information about various plans.

To learn more about your health insurance options, Zirkelbach and Fish-Parcham both recommend Healthcare.gov, a U.S. Department of Health and Human Services website that lets you search for health plans serving your state. You also can use Healthcare.gov to find out whether you’re eligible for government-backed programs such as Medicare, Medicaid or the Children’s Health Insurance Program.

Meanwhile, the nonprofit National Committee for Quality Assurance grades health plans, while the National Association of Insurance Commissioners can help you search for complaints filed against health insurance companies.

Thinking beyond dollars and cents

A lot of people who shop for insurance simply look for the plan with the cheapest price tag. But that can be a mistake, Zirkelbach says. “Don’t focus only on premiums – make sure you understand all the benefits and the potential limitations that may exist in your policy,” he says.

Zirkelbach recommends asking yourself several questions when evaluating a plan, including:

  • Which drugs are covered?
  • How much are the deductibles?
  • How much are the co-pays?
  • How do you access a specialist? Will you need a referral from a primary care physician?

Don’t forget to check the plan’s relationship with your favorite doctors and other health care providers, Fish-Parcham says. “Look at the plan’s provider directory to see if the providers that you now use are in-network,” she says.

An in-network provider is one that contracts with a health insurer to offer care to a plan’s policyholders at negotiated rates. These providers are said to be “in network” for that plan.

Some plans cover services offered only by health care providers in their network. Other plans allow you to seek care out of the network – but you’ll pay a price for the privilege.

When weighing care needs, it’s important to think ahead, Fish-Parcham says. “Identify your current needs, but remember needs can change,” she says. Home health care, physical therapy, substance abuse treatment or new medications are examples of potential health care needs.

In late September 2012, a regulation took effect that requires all health insurers to provide a summary of benefits and coverage for every plan they offer. The summary of benefits and coverage has been standardized to make it easier to compare plans, Fish-Parcham says.

For example, the summary might show how much a plan might pay for treatment of type 2 diabetes, and how much of the tab would be left with the consumer.

“Plans should give you this summary when you first apply or enroll, when you or your employer renews the policy and whenever else you request it,” Fish-Parcham says.

Cutting costs

If cost is a concern, remember that you can save on your monthly premium by purchasing a plan with a higher deductible. A deductible is the amount of money you pay out of pocket before your plan’s coverage kicks in.

However, it’s important to budget for these deductibles. Also, remember that many plans have even higher deductibles if you go out of your plan’s provider network, Fish-Parcham says.

"If you don’t have enough savings to pay for care while you meet a deductible, a plan with a high deductible may not be a good choice," she says.

It may be tougher to cut costs if you have a pre-existing health condition. In such cases, “the price you see on the Web for insurance might not be the price you would pay,” as insurers typically charge higher premiums to riskier policyholders.

“Until 2014, insurers in most states are allowed to price your policy based on your health status and other factors,” Fish-Parcham says.

Beginning in 2014, the federal health care reform law will prevent insurers from charging higher rates – or from refusing to cover you at all – because of your health status. If a health condition prevents you from getting coverage between now and then, check with your state insurance department to explore your options.

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