How to Pick Individual Health Insurance Plan

Selecting a health insurance plan is a fairly simple process but one rooted in tough decisions. What do you weigh more: premium costs or quality of coverage? Is it important to see a certain doctor? Or use a certain hospital? Are you taking any medications? These questions an more have to be weighed before you even wade into the health insurance pool.

Instructions

• 1

  Ask yourself the following question: what do I want in a plan? Health insurance companies offer everything from basic hospital plans, which only cover hospitalizations, to expensive HMOs where you have a co-pay for everything. A common misconception people have is that they can find a cheap plan that will cover everything. That might hold true if you are younger than age 25 and have never been to a hospital before, but the bottom line is, with private individual insurance, if you want the best coverage, you're going to have to pay. Keep in mind, private insurance carriers underwrite all applications for potential risk. If you are on the heavy side, take medications, have been in a hospital within the last year or are in need of a surgery, private carriers can--and likely will--deny you. This is what differentiates private insurance from group plans, where the insurance company has to take you.

  Another tip, call your doctor and ask what insurance companies he takes. If you do not have a physician you see regularly, call doctors in the area and ask what insurance they take and if they are taking on new patients. This will help narrow your plan options and carriers.

• 2

  Identify what kind of coverage you want. For most people, the best options are preferred provider organization, or PPO plans. The benefit of a PPO plan is that you can see any doctor that takes your insurance company. For example, if you have Blue Cross PPO, you can see any physician in the Blue Cross network. PPO plans also tend to have cheaper monthly premiums, but therein lies the downside. PPO's usually have deductibles--anywhere from $500 to $3,500--and also have deductibles on medications. The deductible is what you pay before the insurance company starts paying.

  Another style of plan that has come on lately are health savings account (HSA) plans. These plans are basically PPO plans that charge low premiums and allow you to start a health savings account. The money you put in the account can be used towards any medical costs you may have.

  The flip side of PPOs are health maintenance organization (HMO). An HMO is good because the insurance company pays more, and you typically have co-pays with no deductible for doctor visits and medications. The downside is HMOs have more expensive monthly premiums and you must pick one doctor as your primary care physician. This is fine if you have a doctor you go to all the time, but if you don't, it narrows the field significantly.

• 3

  Select the plan that best meets your wants in terms of premium and type of coverage. Don't make your decision based on one or the other though. If you just go with the cheapest plan, regardless of what it is, you could be shocked when you have a hospital plan and find it doesn't cover medications. And if you just want a plan where you would pay nothing on a claim, don't be surprised when the monthly bill is in the $200 to $300 range for insurance you might not use. Remember, the point of insurance is to be cover in case something happens. Try to get the best plan for your budget but that also won't leave you completely broke if something should happen.

• 4

  Fill out an application. You can do this online or by paper application. Once you are into underwriting, the insurance company can take anywhere from instantly to a week to determine if you will be insured. Don't forget to send the first month's premium with the application. By doing this, your coverage would go into effect as soon as the application is approved. If you are denied, the insurance company will simply refund your money.