For some consumers, buying health insurance is the only health coverage option. However, even if you have health insurance from your employer, private insurance may still be an option to save money. With health insurance premiums increasing every year and employers passing more of the costs onto their employees, your company's health insurance may not be the best deal.
According to a 2009 Employer Health Benefits Report from the Kaiser Family Foundation, the average American worker contributes $779 for an individual health plan and $3515 for a family health plan. Since this is an average, some employees may be paying much more.
Shop Online for a Better Health Insurance Premium
Shop around online and see if you can find a private insurance policy that provides you with the coverage you need but is less expensive than the premium you pay at work.
A good place to start looking for information is the website of the Foundation for Health Coverage Education. This not-for-profit organization provides an interactive "Health Insurance Eligibility Quiz" to help you find affordable health insurance options in your state. After answering five questions about your household, the site provides you with a customized profile that includes the public and private health plans in your state for which family members in your household may qualify along with a quick reference list of phone numbers and websites for all the plans.
Another place to seek information and health coverage premium rates in your area is ehealthinsurance. This online company provides information and access to 1000s of health insurance plans and is licensed in all 50 states and the District of Columbia. Even if you don't buy insurance through them, ehealthinsurance is a good place to search for a health plan and get a sense of how many plans are available in your state and how much they cost.
How Buying a Private Plan May Help
According to the Kaiser report, about 30% of people who work in small companies that offer health care coverage pay more than half of their monthly health insurance premium as a payroll deduction.
Since the average premium for a family is more than $13,000, many employees could be paying more than $6,500 each year. Some of these employees may do better buying their own insurance. For example:
Doug Jones works for a small manufacturing company that offers a PPO health insurance plan (with a yearly deductible of $1500) for employees and their family members. Because of the recent down turn in the economy, Doug's company increased his share of the monthly health premium to 60%, which costs Doug almost $700 each month.
Doug's wife works part time as a librarian and has no health insurance benefit. The Joneses have two children ages 7 and 10. All four family members are in good health and have a healthy lifestyle.
If Doug's company was located in the northern suburbs of New York City, his health plan choices would be limited and a comparable plan to the one he has at work would cost him more than $1,000 a month - not a good option for Doug!
If Doug's company was located in northern Ohio, his selection of affordable health plans would be considerably better with more than 100 health plan options. Depending on how much of a deductible, copayment, or coinsurance he is willing to pay, he can find a plan for himself and his family for considerably less than what he pays at work.
Planning on Switching? Be Careful!
Even if it is less expensive, dropping your job-based coverage and switching to a private plan that you buy may not be the best option for you. Health insurance you get from your employer has some very important protections that may not be available (depending on the state you live in) if you buy private insurance.
These include:
- Guaranteed issue - If your employer offers health insurance, you (along with all employees) must be accepted for coverage, regardless of your health status.
- Guaranteed renewability - Your employer (or health plan) cannot cancel your insurance if you become sick.
- Portability - If you had health insurance (either private or from another employer) before enrolling in your current job-based coverage, your new health insurer must reduce any preexisting condition waiting times by the amount of time that you were covered on your previous plan.
For example, if your new health plan has a 6-month waiting period before covering your treatment of high blood pressure and you had health insurance coverage for the past 12 months, you would be fully covered for your high blood pressure when you start your new plan. - COBRA - If you are laid off from your job and your former employer has more than 20 employees, the company is required by a 1986 federal law (known as COBRA) to offer you the option to pay for an extension of your health insurance coverage for at least 18 months. COBRA is not available if you have a private health insurance plan.
Understand Your Options
You also need to make sure that you fully understand the benefits and limitations of the private plan compared to your employer-based plan. Are the benefits the same? If the private health insurance is a managed care plan (such as a PPO or HMO), are your doctors in the network?
If you apply for private health insurance, do not cancel any health insurance coverage you currently have until you receive an approval letter and insurance policy, or contract from the health plan you selected.,
Before you make any commitment, carefully review the new insurance policy. Make sure you understand and agree with the following:
- the date when the your health coverage begins (effective date)
- the amount of premium you will pay each month
- if there is a waiting period and how long it is
- the actual benefits for you and your family members
- limitations or exclusions that may be of concern to you, such as no coverage for a pregnancy if you are planning to have more children
If your company has a human resources department, speak with the person in charge of your health benefits. It may be possible to switch to a plan with higher out-of-pocket expenses, which could lower your premiums. And, if you have an insurance broker for your home or car insurance, seek his or her advice as well.
