Individual and Family Health Insurance
Are you looking for an individual or family health insurance policy? This is a great place to start!
We’re going to take you through all of your health coverage options and break down each one so you can make an informed decision about what kind of health insurance is right for you and your family.
What Is Individual and Family Health Insurance?
Individual and family health insurance plans are for those who do not have a policy under an employer or association’s group health plan. Group policies are preferable to individual plans because the cost is typically lower, and many employers contribute to the monthly premiums. However, if that’s not an option, an individual or family insurance plan is an alternative way to get help with your healthcare expenses.
An individual plan provides coverage for a single person, while a family plan is for two or more people and can include spouses and children under the age of 26.
Types of Health Insurance in Texas
There are quite a few options for individual or family health insurance in Austin, TX. The type of policy you choose should be based on your personal circumstances, including your health and finances. You should understand all your options so that you can select the type of policy that fits you (and your family) best.
Affordable Care Act Plans
Affordable Care Act (ACA) plans are offered on the health care Marketplace (also called the Exchange). You might also hear these plans referred to as ObamaCare plans. Individuals or families can purchase ACA plans as an alternative to an employer or government-sponsored plans.
Insurance companies who want to provide ACA plans must ensure they meet the requirements set out by the ACA. Most notably, they must include coverage for the ten essential health benefits:
- Preventive care
- Emergency services
- Ambulatory services
- Prescription drug coverage
- Maternity and newborn care
- Pediatric dental and vision care
- Lab tests
- Mental health and substance abuse treatment
- Rehabilitation services
ACA policies offer comprehensive coverage and are available to most people. Unlike some other options we’ll discuss, these plans cannot exclude pre-existing conditions from coverage.
Private Health Insurance Plans
Private insurance plans are another option for individuals and families. They are similar to plans purchased through the Marketplace in that they can provide comprehensive medical coverage, but they are not under the same requirements as ACA plans.
Many private insurers offer plans for purchase year-round, whereas ACA plans can only be purchased during the open enrollment period or after a qualifying life event. If you purchase a private health insurance plan, you’ll want to know what type of network it uses. We’ll talk more about those later.
Short-term insurance plans provide temporary coverage – sometimes for just a few months. They are ideal for individuals and families who need insurance for a short period before their new insurance (like insurance through an employer) begins. No short-term plan can be extended for more than three years, but some states limit the duration even further.
You can enroll in a short-term policy at any time of the year. This also makes them a good option for people who missed the ACA open enrollment period and did not qualify for a special enrollment.
However, short-term plans do not have to meet the ACA requirements, so they are not required to provide the ten essential health benefits. This means that coverage in one of these policies is relatively limited. They can also deny coverage completely or exclude pre-existing conditions.
Medical Indemnity Plans
Medical indemnity plans pay a fixed amount for each healthcare service an insured needs. That is why they are also called fee-for-service plans. For example, the plan may provide a $50 reimbursement for a doctor’s office visit. The insured is responsible for paying any amount over the $50. An indemnity plan can be combined with other health insurance to help pay for their out-of-pocket expenses like copays and coinsurance.
You can use an indemnity plan anywhere – there are no provider networks, and referrals are not required. While many people choose to get their care primarily from one provider, there is no requirement to choose one primary care physician. The plan may require you to pay for services upfront and then submit a claim for reimbursement.
Medical indemnity plans often have annual deductibles that must be met before coverage begins. After that, the plan will either designate a copay or coinsurance amount for each service. They typically base their payments on UCR fees – usual, customary, and reasonable rates. UCR fees are based on what other providers in the area charge for a given service.
Indemnity plans do not meet ACA requirements, and they can base their plan acceptance and coverage on pre-existing conditions. They often include per-incident, annual, and/or lifetime benefit limits.
Catastrophic Health Insurance Plans
Their name may explain themselves, but let’s talk about what kind of coverage you’ll find in a catastrophic plan and who these plans might be a good fit for.
A catastrophic policy will have a very low monthly premium because the coverage is not meant to be used routinely. They come with an extremely high deductible. A single person in 2022 will have a deductible of $8700. Once the deductible has been met, the insurance company will pay 100% of the covered services. They are truly meant to be used in cases of catastrophe.
That being said, they do have some routine benefits. For example, all of the essential health benefits outlined in the ACA are included in a catastrophic plan, and they cover a minimum of three primary care visits each year prior to the deductible requirement. They also have some preventive care services with no cost-sharing.
Catastrophic plans are only available to individuals under the age of 30 or those who are over 30 but qualify for a hardship or affordability exemption. To be approved for a catastrophic plan due to an exemption, you must apply and obtain an exemption certificate number.
High Deductible Health Insurance Plans
High deductible health plans (HDHPs) are similar to catastrophic plans but usually have lower deductibles. The deductible will vary with the plan but usually lingers around $4000 – $5000.
The feature that draws many people to an HDHP is the ability to contribute to a Health Savings Account (HSA). Individuals with one of these high deductible policies can contribute pre-tax earnings to an HSA, up to certain limits. They can choose to keep the deposits as cash or invest the money. The investments grow tax-free and are also spent tax-free, as long as they are used for qualifying medical services or products.
Money held in an HSA rolls over from one year to the next. Once the account owner turns 59 1/2, they can use the funds to pay for anything without being penalized. However, if the funds are used for non-medical items, you will pay tax on those purchases.
Types of Provider Networks
One of the most important things you need to pay attention to when you choose an insurance policy is if the plan utilizes provider networks and, if it does, what type of network they use. There is no “bad” network, but you should know which one your plan uses to get the most out of your benefits.
The two most common networks are Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs), but we’ll discuss others here as well.
Health Maintenance Organizations
An HMO insurance plan requires its subscribers to seek care within a specific network. They’re also called “managed care” plans because they aim to reduce healthcare expenses by providing preventive services and utilizing a primary care doctor to coordinate the insured’s healthcare.
HMO networks are sometimes small, and subscribers may not have many providers to choose from. However, they should stay inside the network because they will have no benefits if they get care from an out-of-network provider or facility.
HMO subscribers must designate a primary care physician (PCP) and obtain a referral from their PCP if they need to see a specialist. That specialist will also need to belong to the HMO network.
Preferred Provider Organizations
A PPO insurance plan still utilizes a network, but PPO networks are often much more extensive, giving members more providers to choose from. Plus, they will still have benefits available if they seek care outside of the network – the member will just be required to pay more of the cost than if they had seen a provider within the network.
PPO plans do not require their members to designate a PCP or obtain a referral before seeing a specialist.
Point of Service Plans
The abbreviation for these plans is HMO-POS. They combine aspects of both HMO and PPO plans.
Insureds with an HMO-POS plan should utilize the HMO network to get the most benefits. However, like PPO plans, an HMO-POS policy will allow for some benefits outside the network. The most significant difference is that a separate deductible will apply for services performed within the network and those performed outside the network. (A PPO just has one deductible that applies to all services.)
HMO-POS members must choose a PCP but do not need a referral to see a specialist.
Exclusive Provider Organizations
An EPO plan is similar to an HMO but with some minor differences. EPO members must receive care from a specific network and will not have any benefits outside of the network. Some policies require their members to choose a PCP while others do not. Referrals to specialists are not required.
EPO plans typically cost less than a PPO plan since there are some limitations, and they often have a higher deductible than PPO plans.
Tiers of Health Insurance Plans
If you search for a private health plan or one within the Marketplace, the options you’ll find are categorized by metal tiers. Options are platinum, gold, silver, and bronze. Each type offers coverage for the same services, but the tiers differentiate the level of coverage within the plan. For example, the higher tiers (platinum and gold) will cover a larger portion of your healthcare expenses and have a higher monthly premium.
Let’s discuss each tier in more detail.
Platinum plans have the most coverage and require the least out-of-pocket expenses from the insured. The deductible found in a platinum plan will also be very low, decreasing the insured’s financial responsibility even more. Once the deductible has been met, platinum plans operate as a 90/10 split – the insurance company pays 90% of the cost, and the insured pays 10%.
Of course, the extensive coverage means these plans have the highest monthly deductibles. A platinum plan is a good choice for those who can afford the higher premiums and know they require more medical care than just preventive services.
Gold plans are similar to platinum plans – they have low deductibles and cover most of your healthcare expenses. However, these policies have an 80/20 split, with the insurance company paying 80% and the insured paying the remaining 20%.
The monthly premium for a gold plan will be less than platinum but will still be higher than those others because of its excellent coverage. These policies are also great for those who know they need more care and would benefit from the low coinsurance requirement.
Silver plans are your middle-of-the-road coverage option. Their coverage, deductibles, and premiums are “average,” which isn’t necessarily a bad thing in this case. Silver plans operate on a 70/30 coinsurance split, so your portion will be higher than it would be on a gold or platinum plan. However, the silver plans have a lower monthly premium.
Individuals who enroll in a silver plan may also be eligible for cost-sharing reductions, which will give them a discount on their deductibles, copays, and coinsurance costs. Cost-sharing reduction (CSR) discounts are offered based on the Federal Poverty Level (FPL). Households whose income is 250% of the FPL or lower are eligible for the discount. There are different levels of discounts based on your income.
For example, a single person who falls into the higher end of the discount threshold at 250% has an income of $5200. This would qualify them for a 3% discount. The insurance company will pay 73% instead of 70%. Individuals or families with very low income could see a discount of up to 24%.
A silver plan is an excellent option for those who are healthy or would like a lower premium. While you may pay more for services, a silver plan will provide great coverage if you need medical care.
Bronze plans offer the lowest coverage of the four metal tiers. They typically have higher annual deductibles – possibly thousands of dollars. In addition, they offer a 60/40 coinsurance split, requiring the insured to pay 40% of the expenses after the deductible has been met. However, bronze plans offer low monthly premiums compared to the other tiers.
A bronze plan is a great option for healthy people who would like a lower premium and rarely need to seek medical care. They are good plans to have in place to prevent financial disasters in worst-case medical scenarios.
You may be feeling overwhelmed at this point. Choosing the right insurance policy is a daunting task, but our licensed agents are here to help you through every step of the process. During a complimentary consultation, your agent will ask you questions to understand your situation and what type of health insurance would benefit you. Then, we’ll make suggestions, and when you’ve chosen a plan, we’ll file all the necessary paperwork.
Finding insurance doesn’t have to be complicated – call us for help today!
Searching for quick answers to your individual and family health insurance questions? Look no further than our Frequently Asked Questions!
What is the difference between an ACA plan and a private insurance plan?
Private insurance plans do not have to abide by the same rules and regulations as the ACA plans. This includes offering the essential benefits as part of their coverage.
Are individual health insurance premiums tax-deductible?
Yes, as long as you are paying the premiums out-of-pocket, you can deduct them from your taxes.
Why is COBRA so expensive?
The cost to COBRA your employer’s insurance plan will not be much more than it was when you were employed. The difference for many is that your employer is no longer contributing to your premiums. The premium will only be increased by 2% to account for administrative fees.