About Individual Health Care Policies

As the costs of health care continue to rise, maintaining a reliable health care policy goes a long way toward keeping individual health-related costs down. Individual health care policies can provide the same types of coverages as a group or employer-sponsored plan, though costs can vary depending on location and a person's overall health status.

Identification

• Individuals who are self-employed or unemployed for long periods of time may benefit from the coverage provided by an individual or private health care policy. When compared with group, or employer-sponsored plans, the costs is typically higher depending on the type of coverage desired according to the National Association of Health Underwriters. As with most types of insurance, the issuing company saves money by spreading the potential risk among its policyholders. For individual health care plans, insurers must spread the risk in different ways.

Function

• Health insurance coverage typically comes in standardized packages which include certain types of coverage. In terms of individual health care policies, standard coverages may be significantly less when compared to group policies, according to the National Association of Health Underwriters. The type of coverage included in a private policy depends on how a particular state government decides to define "standard coverage." In states where a particular type of coverage is lacking, individuals can still purchase additional coverage in the form of an optional policy rider.

Rate Classes

• According to the National Association of Health Underwriters, individual health care policies fall within certain rate classes depending on the health of the individual. Insurance companies assign rate classes based on health status. This process enables insurers to spread potential risk among groups of policyholders. A particular rate class will determine an individual policy's premium and copay rates, as well as annual renewal rates. Annual renewal rates depend on the number of claims filed by the group within a year's time. As a result, individual coverage typically runs higher than employer-sponsored plans.

Health Status

• Health status ratings can be affected by whether a preexisting condition exists within a person's medical history, according to the National Association of Health Underwriters. A preexisting condition includes heart problems, diabetes or any other condition that requires ongoing medical care. Insurance companies have denied coverage to individuals with preexisting health problems, though in some cases coverage is provided once a set waiting period is passed. Companies may determine the length of a waiting period based on previous coverage and the length of time a person was covered under the previous plan.

Considerations

• As of 2010, companies in the United States are required to cover individuals with preexisting conditions due to a national health care reform bill, according to HealthReform.gov. This type of individual health care policy falls under an interim high-risk pool that's government-subsidized. According to the National Association of Health Underwriters, many states have an existing program that covers high-risk policies, with some companies designated as the "insurer of last" resort. And while some insurance is better than none at all, high-risk policies tend to be significantly more expensive than standard policies.