Information on Individual Health Insurance

Self-employed or unemployed people can get health coverage by purchasing an individual health insurance policy. These policies offer many, though not necessarily all, of the same coverages as a group health policy, and sometimes the purchaser has the option of adding extra features. Insurance companies that offer individual coverages have more leeway in whom they can exclude for particular medical conditions, and they also require the patient to submit a medical history as part of the application process.

Definition

• The National Association of Health Underwriters defines individual health insurance as an insurance policy that individuals purchase for themselves or their family members through independent brokers or agents instead of through their employer or a government organization. Approximately 5 percent of Americans have individual health policies. Regulations for marketing, selling or buying these policies vary from state to state.

Distinctions

• The laws dictating the required provisions of individual health insurance policies differ somewhat from the laws governing group insurance policies. Generally, individual policies may not include certain benefits that would count as standard for a group policy, such as maternity care, drug and alcohol abuse treatment or treatment for other secondary medical conditions. In some cases, the person taking out the policy may pay extra for an insurance rider to cover these "extras."

Application

• Since private health insurance companies tend to assume more risk than group insurance providers, applicants must usually complete a form listing their medical history and behaviors. Depending on the individual's state, an insurance company may opt to reject applicants with certain chronic or terminal illnesses.

Rates

• The medical history and current behaviors that applicants include on their insurance questionnaires directly affect the rates they will pay for individual health insurance. Pre-existing conditions such as high blood pressure or behaviors such as smoking count as negatives that can raise the applicant into a higher rate class. In cases where the applicant fails to give information on a given condition or behavior, the insurance company will assume the worst and assign a negative rating, which may raise the applicant's premium. Applicants in this situation may have to select a policy with a relatively high deductible to get a premium within their budget range, according to the Mama's Health website.

Qualification

• Most applicants can qualify for medical insurance even with minor health problems in their medical history, but some wait until they have a known medical condition before applying for coverage. Insurance companies may check applicants' medical histories for verification, reserving the right to exclude coverage for particular conditions for an initial "waiting period." Some applicants with these conditions may receive coverage with little or no waiting if they have recently had prior health coverage. All but five U.S. states have some method for permitting coverage of even the most serious pre-existing conditions.