Private insurance through life stagesFrom the new grad to the early retirement entrepreneur, everyone's situation is slightly different. Click on the tab that most closely matches your lifestyle for some extra tips.
New grads/young singles
- If you are covered under your parents' policy, find out when and why your coverage would end. (Is the trigger your age, the fact that you've graduated or that you'll be living on your own?) If you're still eligible, the parents' insurance could be a good bridge if you just need something for a couple of months until you get a job, or until a new employer's policy takes effect.
- If you need coverage for only a limited period, you can consider short-term or temporary policies. Often written for periods of only a few months to a few years, these policies can deliver major medical coverage at a fairly affordable price. "They're probably about half what you'd see for a full major medical policy," says Scott Leavitt, national president of the National Association of Health Underwriters. But, he says, they don't cover pre-existing conditions. And you usually have to be "relatively healthy" to get one, says Sam Gibbs, senior vice president of eHealthInsurance.com. Examine what is and isn't covered, and look at all the payout limits of the policy.
- Tight on money? One option to investigate is a high-deductible, catastrophic policy. Such policies have high deductibles but are designed to cover major illnesses and accidents. Some can be paired with health savings accounts, which allows you to bank the deductible tax-free, to pay for medical care, dental visits and other health-related needs. And some employers will contribute to your HSA.
- Be skeptical with discount plans that promise cut rates with their doctors, says Jerry Flanagan, health care policy director for Consumer Watchdog. Consumer advocates have discovered cases where doctors either never heard of the plan or the "discount" rate was higher than it would have been otherwise, he says. Check anything suspicious with the state's insurance department or consumer affairs department.
- Young families often feel the money pinch as acutely as grads and check out catastrophic and HSA plans for the same reason. One downside is that just one emergency room visit or pregnancy can leave you scrounging for the deductible. But some employers will contribute to your HSA. Best bet: Unless you can really bank that deductible (and have it ready at a moment's notice), this might not be the best option. Conversely, if it's all you can find that you can afford, it's usually better financial protection against a total wipe out than nothing at all.
- Another thing that often weighs against families shopping for their own health coverage is the possibility of pregnancy. "One of the big downsides with individual coverage is maternity," says Scott Leavitt, national president of the National Association of Health Underwriters. If a pregnancy costs $10,000, the deductible might be half that, he says. Shop around carefully. While some carriers might penalize you for potential fertility, you might actually be able to find one that doesn't.
- Are you looking for coverage after a job layoff, or to bridge the gap between COBRA and a new employer's health insurance? Consider a short-term or temporary policy. Written for a specific period of time (a few months to a few years), it's cheaper than traditional open-ended coverage. "But it won't cover pre-existing conditions, says Scott Leavitt, national president of the National Association of Health Underwriters. And it's usually reserved for those who are "relatively healthy," says Sam Gibbs, senior vice president of eHealthInsurance.com.
- If your income is low to average, ask about your state's kids' health plan. (Start with your state's department of insurance.) Most states have the plans, though in some cases there are waiting lists. To qualify, you usually have to be below a certain income threshold (often several times higher than the poverty level). You pay premiums, just as with any other plan. Since it's covering a larger pool of kids, you might be able to buy more complete and affordable coverage for the little ones than you are able to get on your own.
- Does someone in the family have health problems? Consider covering them through your state high-risk pool. Subsidized by the insurance industry, coverage is guaranteed for anyone who qualifies, and your pre-existing conditions are covered. The bill can be pricey, "but, especially people with existing health conditions, don't want to be without coverage," says Sandy Praeger, president of the National Association of Insurance Commissioners. Requirements: you've been denied coverage or the premiums you're being quoted are too high to be affordable. If you have alternatives, the high-risk pool "is a bad place to end up," says Jerry Flanagan, health care policy director for Consumer Watchdog. One reason is that there are sometimes limits on the amount the policy will cover, which can be a problem for someone with health issues, he says. So ask about restrictions or save the option as a last resort.
- Whether you want to grab the gold watch early or just go off and start your own business, it can be a tricky time as far as individual coverage. If you're well off, you can probably afford your own premiums. But if you have a minor health condition or two, carriers could be finicky about extending coverage. The solution is the same as for the younger set -- shop carefully. Not every company will view every condition the same way.
- Ironically, some early retirees find themselves turning to the same solution as cash-strapped young grads -- catastrophic policies with health savings accounts. But at this stage, it's either because those policies are all that's being offered, because major medical plans include too many exceptions for pre-existing conditions or because the premium price is too high even for someone who's financially comfortable.
- Price your company's COBRA (Consolidated Omnibus Budget Reconciliation Act) plan. Under most circumstances, you're eligible to stay on the company's group insurance for 18 months after your employment ends. The only caveat is that you have to pay the premium yourself. (Send checks on time every month, and in such a way that you can prove when they were mailed and delivered.)
- If you're close to 65 (or will be once you've exhausted COBRA), you can also consider a temporary policy to bridge the gap until Medicare begins. It won't cover pre-existing conditions, says Scott Leavitt, national president of the National Association of Health Underwriters. And you need to be "relatively healthy" to secure this type of coverage, says Sam Gibbs, senior vice president of eHealthInsurance.com. But, because it's only short-term, it's usually cheaper than an open-ended policy.
- You can also evaluate the coverage available through your state's high-risk pool. (Again, best source: your state insurance department.) States offer coverage to people who either can't get coverage or can't get it at a rate that is reasonably affordable. You can't be denied, though it can take several months to process paperwork, says Jerry Flanagan, health care policy director for Consumer Watchdog. And pre-existing conditions are covered. But because most people taking this route have health issues, coverage can still be high, says Sandy Praeger, president of the National Association of Insurance Commissioners. And sometimes coverage is limited, says Flanagan, who calls the pools "a bad place to end up." Research alternatives and save this one for a last resort.
- Be careful in evaluating group insurance offered through affinity groups and associations. While some might be exactly what you need, others can promise more than they deliver. And it's up to you to ferret out which is which. Probe carefully to get answers on deductibles, limits on services and prescriptions, and total payout limits on illnesses and the policy as a whole. Find out who provides the coverage and check out the company's track record (both financially and in terms of customer service). And how does the policy and price compare to your other options?