What Do I Need to Get Medical Insurance?

Health insurance is important because you never know when you will get sick or injured, and the cost of treatment can be very high, often more than a family can comfortably afford without help from an insurance company. What you need to obtain a policy, however, depends on the kind of health insurance you want.

Large Group Plans

• If you work for a business that offers you health insurance and has 50 or more employees, the plan will probably be a large group health plan. This is significant because there is typically no medical underwriting involved in joining a large group plan. You also cannot be individually excluded from coverage; in other words, if the plan is available to some employees, it must be available to all. This is the easiest way to secure health insurance for people with pre-existing conditions or poor health.

Small Group Plans

• Businesses with fewer than 50 employees generally qualify for small group health insurance plans. While you still cannot be denied coverage based on a pre-existing condition or poor health, you can face some obstacles. Small group health insurers typically ask you to complete a medical questionnaire, so you must disclose your health status. The insurer is typically able to review six months of your medical history, and exclude coverage for pre-existing conditions for up to 12 months. You also may have to pay higher premiums than your colleagues with better health.

Individual Plans

• If you cannot or choose not to get insurance through an employer, you can apply for an individual health insurance plan that only covers you and your family members, if applicable. These plans require medical underwriting consisting of a health questionnaire and, occasionally, a physical exam with blood, urine or saliva samples. Based on the information in your application, the insurer can accept or reject you from coverage, and charge you a premium according to your health status.

Balanced Risk Pool

• There are different levels of medical underwriting depending on which insurance plan you want because insurers must anticipate a certain number of statistical losses and charge enough premiums to cover them. This assumption is based on a balanced risk pool. With large groups, enough people exist in the group to balance it; insurers know that some will file many claims while some won't file any. As the risk pool shrinks, the chance of an insurer having too many people in the group file heavy claims increases, so it must charge premiums according to health status to ensure it can pay claims as needed.