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Your Private Health Insurance Options

By Compuquotes Team on March 27th, 2008

Health Insurance

Most Americans rely on a third party- either a private insurer, or a public governmental entity-to help them finance the cost of their medical needs. The following are various types of third-party coverage offered in the US.

Employer Coverage

The majority of Americans obtain health insurance via their employer, and this is by far the easiest and most user-friendly type of health insurance available. Job-based health insurance is regulated on a federal level, and as such every person enrolled in such these types of healthcare plans has the same basic rights. For example, no employer can exclude an employer based on their health status.

The downside of employer coverage is the lack of choice in terms of the type of plan you choose. In most cases you'll have only a limited selection of options. However, in terms of the statutory protection you receive, this is definitely the best option, as individual insurance is unregulated at the state level and does not provide all the protection employer insurance offers.

Individual Policies

Because individual health insurance is regulated at the state level, owners of individual policies do not enjoy as many protections as do owners of group policies. For example:

  • Applicants for individual policies may be declined coverage if their health is poor
  • While most policies include guaranteed renewability, people who don't get this option are at risk of having their insurance canceled without warning
  • In some states, health insurance companies can issue policies that exclude certain pre-existing conditions for the life of the policy

These types of issues mean that when buying individual health insurance it's very important to know what you're buying, and to understand the terms and conditions of the policy.

Association Health Plans

Association Health Plans (AHPs) are an alternative to individual policies for people who aren't eligible for employer-based health insurance. Members of the association can access more favorable health insurance rates than an individual might.

However, it's important to understand that AHPs do not qualify as group insurance in the way that an employer-based plan does. Members of an AHP do not qualify for the consumer protections that apply to members of employer-based healthcare plans, such as guaranteed renewal. Even so, they can be a good way of helping small employers and the self-employed to obtain better health insurance for themselves and their employees.
Consumer-Driven Health Plans

Consumer-driven health plans include options such as the Health Savings Account (HSA), which is tied to the employee rather than the employer, and stays with you each time to change jobs. These plans have two components: an interest-bearing savings account, and a high-deductible health plan (HDHP).

The savings account can be funded with pre-tax dollars, and any interest earned by the account is tax-free (unless money is withdrawn for non-medical purposes). Funds in the account roll over each year, and once the account owner reaches 65, they can withdraw the money for any purpose without paying taxes. The HDHP component is a plan with an annual deductible of at least $1,050 for individuals and $2,100 for families.

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