Understanding Individual Health Insurance Policies

Purchasing an individual health insurance policy can be a complex process full of unfamiliar terminology and concepts.

This post aims to explain the key aspects of individual health policies, providing consumers with the knowledge to confidently evaluate plans and choose one tailored to their needs and budget.

Individual Health Insurance Policies

Who Needs an Individual Health Policy?

Individual health insurance aims to provide financial protection in case of illness or injury for those who do not receive employer-sponsored health benefits.

Reasons one may purchase an individual health plan include:

  • Being self-employed or working for a small business that does not provide insurance. According to a 2022 estimate, over 59 million Americans work for small businesses.
  • Experiencing job loss or transitioning between jobs. Employee health benefits typically terminate shortly after employment ends.
  • Early retirement before age 65 and eligibility for Medicare.
  • Having a pre-existing medical condition and needing comprehensive coverage options.
  • Being under age 26 and needing coverage separate from parents/guardians.
  • Wanting supplementary coverage for care not fully covered by an existing primary insurance plan.

Plans can be purchased through federal or state-based health insurance marketplaces, directly through insurance carrier websites, or with the assistance of an independent insurance agent or broker.

Key Benefits of Individual Health Insurance

Well-designed health plans aim to make care financially accessible and protect policyholders from potentially ruinous medical bills. Benefits include:

Financial Protection

An individual health plan contains measures like annual out-of-pocket maximums and covered services intended to cushion patients from unexpected healthcare expenses. One study found medical issues contribute to 66.5% of all bankruptcies in America. Quality health insurance aims to provide vital financial safeguards when serious illnesses strike.

Access to Preventative Services

In addition to urgent care, individual health plans cover routine preventative screening services tailored to your age, gender, and risk factors. Annual wellness visits, cancer screenings, vaccines, reproductive health services, and more may be fully covered before the deductible is met, helping policyholders stay healthy.

Choice of Providers

Unlike restrictive HMO plans requiring referrals and solely in-network care, individual PPO plans allow members more choice over where to receive care. Patients can self-refer to local specialists, convenient clinics, out-of-state providers when traveling, and top regional hospitals without insurance pre-authorization. This facilitates the continuity of care.


Policyholders can retain coverage regardless of life changes and preexisting conditions. Premium tax credits and subsidies may even continue to assist with costs if switching jobs or relocating. Individual health plans travel with policyholders over state lines and life transitions.

What Factors Should I Consider When Comparing Plans?

When evaluating individual health insurance policies, pay close attention to these key variables that influence out-of-pocket costs:

Monthly Premiums

Premiums are the upfront recurring fees an individual or family pays for health insurance, usually charged monthly. Premium prices vary based on the generosity of the plan’s coverage and benefits, as well as characteristics of who is being insured like age, tobacco use, and location.

Use each carrier’s online cost estimator to compare how premiums differ across plans. Note that certain applicants may qualify for government subsidies or tax credits reducing monthly costs.


The annual deductible is the amount a policyholder pays out-of-pocket before insurance begins contributing towards medical costs in a coverage year. Plans may have separate deductibles applying to certain services. High deductible health plans (over $1,400 individual/$2,800 family in 2023) may enable eligibility for tax-advantaged HSAs.

Copays vs Coinsurance

Copays are fixed dollar amounts paid for certain covered services, like a $30 charge per primary doctor office visit or $75 for an urgent care clinic visit.

Coinsurance represents a percentage of medical costs that policyholders pay after reaching their annual deductible. A common split is 80/20, meaning insurance covers 80% of expenses while the member pays the remaining 20% out of pocket up to their plan’s annual limits.

Compare the copays and coinsurance rates defined in each plan’s summary coverage document when evaluating options. Seek first dollar coverage for the services you utilize most.

Annual Out-of-Pocket Maximums

This yearly limit caps total spending on deductibles, copays, and coinsurance for covered healthcare services over a year. Expenses beyond this amount are fully covered by insurance. Out-of-pocket maximums give peace of mind against the worst-case scenario of exorbitant treatment costs in a given year.

PPO plans have a separate lower out-of-pocket maximum for in-network services and a higher out-of-pocket maximum for using out-of-network providers. Review these costs carefully.

Types of Individual Health Insurance Plans

Health insurance packages differ in structure, flexibility, and cost. Compare the strengths of each when selecting an individual or family medical plan.

Health Maintenance Organization (HMO) Plans

A managed care model requiring all care be delivered within the HMO’s closed network of physicians, medical facilities, pharmacies, and labs except in emergencies. Seeing out-of-network providers requires referrals and pre-authorization.

  • Lower premiums
  • Little to no coverage for out-of-network care
  • Need referrals to access specialists

Preferred Provider Organization (PPO) Plans

A flexible plan option allowing insured persons to visit any healthcare providers but pay less when selecting care within the PPO’s network of preferred clinics, hospitals, doctors, laboratories, and pharmacies.

  • Freedom to choose providers
  • Nationwide coverage when traveling
  • Out-of-network care costs more

Point of Service (POS) Plans

Combines attributes of HMO and PPO plans. Members can opt to see certain specialty providers outside the plan’s network without needing formal referrals (going ‘out-of-network’). This reduces delays in accessing expert care but comes at higher personal cost.

  • No referrals required for some specialists
  • Out-of-network flexibility when needed
  • Requires gatekeeping primary care

High Deductible Health Plans (HDHP)

A plan with lower monthly premiums but a deductible exceeding $1,500 individual/$3,000 family before coverage kicks in. To offset high deductibles, HDHP members can contribute money tax-free to Health Savings Accounts (HSAs) saving for medical expenses.

  • Lower premium costs
  • Compatible with HSAs
  • Very high deductibles

Catastrophic Coverage

The most bare-bones type of plan, catastrophic health insurance only covers three primary care visits per year and preventative screenings prior to the deductible. Meets ACA requirements for minimum essential coverage.

  • Lowest premium costs
  • Minimal coverage until deductible met
  • Primarily for major health events

Where Can I Purchase an Individual Health Insurance Plan?

Independent agents and brokers, government-run insurance exchanges, and health insurance carrier websites all offer platforms for consumers to evaluate, compare, and directly enroll in individual and family health plans matching their medical needs and budget.

Health Insurance Marketplaces

The Affordable Care Act (ACA) established federal and state-based health insurance exchanges offering personalized comparison shopping of major medical policies. Enrollment periods are specified each year. Federal tax credits and cost-sharing subsidies are exclusively available via the marketplace to reduce monthly premium and out-of-pocket costs for qualifying lower-income enrollees.

Healthcare.gov directs visitors to their state’s ACA health insurance exchange website. Expect questions about household size, income, and any offers of health coverage from an employer when applying for plans and financial assistance.

Insurance Agents and Brokers

In-person assistance from licensed, unbiased agents and brokers simplifies the application and enrollment process. They possess extensive knowledge regarding regulation details and insurance carrier reputations within local markets around the country. Agents help consumers identify the optimal plan offering robust coverage unique to their health profiles and priorities. They facilitate transitions when shifting between insurance providers or markets.

Independent brokers have access to plans both on and off public exchanges, with some exclusive products not available directly to consumers from insurance carrier websites. Agents may run advanced custom searches across hundreds of options to pinpoint your best value pick. They also provide ongoing account management as policies renew year-over-year.

Direct Enrollment via Insurance Company

Major health insurance companies like UnitedHealthcare, Anthem Blue Cross Blue Shield, Cigna, Aetna, Humana, Kaiser Permanente, and others allow consumers to directly purchase policies online without utilizing brokers or marketplaces. However, this risks becoming overwhelmed navigating the wide range of proprietary plans independently. Reaching out to member services may result in persistent sales calls rather than unbiased education.

Switching policies mid-year due to life changes also proves more straightforward when already connected to a dedicated independent agent guiding transitions between carriers when needed. They already possess your updated personal details, medical history, doctor relationships, prescription drug lists, and other key data to ensure continuous care coverage.

Individual Health Policy


As demonstrated by this detailed overview, evaluating and enrolling in individual health insurance constitutes a multifaceted process full of crucial decisions impacting access to care and financial security. Prioritizing time upfront to understand terminology, compare variables across plans, and select optimal coverage delivers substantial return on investment when the inevitable need for medical attention arises down the road.

Discuss your specific situation with a licensed health insurance agent specializing in your state and local individual health insurance market landscape. Leverage their expertise explaining confusing concepts, demystifying policy documents full of fine print, and illuminating the pros and cons of coverage selections. An agent considerably simplifies what can otherwise be an overwhelming Do-It-Yourself health insurance shopping experience. Protect yourself and loved ones with the right high quality plan for your needs and take the guesswork out of using your benefits.

Frequently Asked Questions About Individual Health Insurance

What medical expenses are typically covered by individual health insurance plans?

At a minimum, all ACA-compliant major medical insurance plans must cover a defined set of “essential health benefits” categories without annual or lifetime dollar caps when used in-network, including:

  • Ambulatory services (outpatient care)
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance abuse disorder services, including counseling and psychotherapy
  • Prescription drugs
  • Rehabilitative services and devices
  • Laboratory services
  • Preventive care and chronic disease management
  • Pediatric services, including dental and vision care

How do I determine the right amount of health insurance coverage for my personal situation?

Evaluating the appropriate level of coverage is a very individual determination based on your medical history, doctor/hospital preferences, financial means, career stability, future family plans, risk tolerance for out-of-pocket maximums, and eligibility for cost-sharing subsidies.

Discuss these personal factors with an independent broker to identify the “Goldilocks plan” that is not too much or too little, but “just right” coverage tailored to your circumstances. They help establish appropriate limits and deductibles you can afford yet still provide sufficient protection from infrequent but high severity claims.

What options exist if I have a preexisting medical condition?

One major achievement of the Affordable Care Act was to implement guaranteed issue rules preventing insurance carriers from denying coverage or charging more due to preexisting conditions like diabetes, cancer, asthma, hypertension, etc. This opened access to individual insurance for those with chronic illnesses unable to secure affordable policies in the past.

Every year during the federal open enrollment period and certain life qualifying events allowing special enrollment mid-year, those with preexisting conditions can obtain ACA-compliant health plans without medical underwriting. State regulated markets may provide additional protections. Discuss your unique health history with an independent licensed agent to identify suitable plans.

How do I file a claim under my individual health insurance plan?

Contact customer service at your health insurance carrier via the phone number listed on your member ID card for guidance when you need to submit a medical claim. Each company has their own claim forms and procedures regarding:

  • Necessary details to successfully process each claim, like itemized provider bills listing diagnosis procedure codes
  • Online versus paper claim filing instructions
  • Steps for reimbursement if you already paid out-of-pocket for a service
  • How to appeal a claim denial and provide additional supporting documentation

What subsidies and cost savings programs should I inquire about to lower my premiums and out-of-pocket costs?

  • Federal Tax Credits and Cost-Sharing Subsidies via Healthcare.gov
  • Medicaid and Children’s Health Insurance Program (CHIP) expansion in select states
  • Group association health plans through professional/trade organizations
  • Telemedicine and virtual-first health plans with lower premiums through companies like PlushCare and Gravie
  • Pharmaceutical company prescription medication coupons/vouchers
  • Negotiating prompt-pay cash prices and self-pay fee exceptions with hospitals/clinics

Discuss your eligibility and complete applications for any assistance programs to reduce the burden of medical expenses. Independent agents assist navigating available subsidies, discounts, and other savings specific to your situation.


I hope this comprehensive guide explaining key components of individual health insurance leaves you feeling empowered to confidently compare plans and optimize coverage for your needs.

Do not hesitate to engage a licensed agent specializing in your geographic region to discuss lingering questions and receive expert guidance in selecting the right policy protecting both your finances and physical health.

I am happy to clarify any concepts related to deductibles, types of plans, covered benefits, choosing providers, utilizing subsidies, filing claims, or other facets of individual insurance.

Please let me know if any part of this overview remains unclear or where I can further elaborate on this rather complex topic.

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