Individual health coverage: if you’re lucky, you’ll never have to buy it. But an unfortunate cause of the recession and rising unemployment has led many Americans to buy health plans on their own, unaware of the risks that can come with them.
Nancy Metcalf, senior editor of Consumer Reports Health, recently waded through the process of buying individual insurance for the magazine’s May issue, and she found many “buyer bewares” lodged in the fine print. If you’ve been covered through a job for years, chances are you are unprepared for what awaits you, she says.
The first thing to look out for is coverage gaps. You may assume that you can buy the same type of plan you had at work, but that’s often not the case. If you aren’t careful you could pick a policy that won’t actually cover you if you get sick. One man Metcalf spoke to got cancer and needed radiation therapy that cost $40,000 only to discover his individual policy didn’t cover the therapy. He had to wait five months until he went broke and went on Medicaid in order to get the treatment.
Metcalf warns to be careful of any plan that says it’s not a major medical policy or a limited benefit policy in the fine print – those are signs that some major coverage is probably left out. Also avoid low coverage limits, she says. People don’t tend to realize how much medical bills can cost you if you become seriously ill. If your policy only covers $50,000 a year, you may be out of luck if you need even a relatively minor procedure.
Finding health coverage on your own is not the place to bargain hunt. “There is no free lunch when it comes to health insurance,” Metcalf says. Most cheap plans are cheap for a reason, usually because entire categories of treatment – from outpatient procedures to doctor visits to prescription drugs – aren't covered. You simply don’t know what kind of care you will need in the future, so don’t scrimp.
If you have to make a trade off in the cost of finding coverage, Metcalf and Consumer Reports recommend taking the policy with the higher deductible. It’s better to be out a few bucks up front than ending up with a truckload of medical and hospital bills later.