Insurance Products to Consider when Away from Home

It’s important for all the vacationers, business travelers, cottagers, and snowbirds, to consider the following insurance tips before travelling:

Travel Medical Insurance

Covers you for emergency hospital and medical expenses when out of the province. If an insurance company agrees to cover you for pre-existing conditions, you should get its agreement in writing.

Home Insurance

• Check your home insurance policy for the expiration date and for other "away" requirements. Many policies will cancel coverage if your property is left unoccupied or unattended for extended periods of time.
• Check coverage limits on valuables. Some policies contain limitations for loss or damage to these items if you are away for an extended period, or if you are taking the valuables with you.
• If you’re travelling in the winter, make sure you drain your home’s plumbing before you leave or arrange to have your home inspected on a daily basis by a competent individual to ensure that heat is maintained. Insurance companies won't cover damage that arises from the freezing of indoor plumbing.
• In the winter, arrange for someone to clear snow from your roof. Some home insurance policies do not cover roof collapse due to excess snow.

Automobile Insurance

• Check the effective dates of your driver's licence and validation sticker to make sure they don't expire while you're away.
• If you plan to rent an automobile, check with your insurance company, broker or agent to determine whether you'll need the supplementary insurance coverage offered by rental companies.
• If you plan to take your own automobile and will be out of the country for more than 30 days, be sure to advise your insurance company, broker or agent. Also make sure you have the proper coverage and meet driver’s licence requirements for the jurisdiction in which you'll be travelling.
• If you are leaving your vehicle at home and it won't be used by anyone, save money by suspending certain coverages from the policy, such as collision. Be sure to add the coverages back once you return.
  

Why Americans Spend So Much on Healthcare

The United States spends far more per person on healthcare than any other country—about twice as much as other developed nations. Yet people in the United States don’t appear to be getting their money’s worth.

The United States lags far behind other developed countries on almost every important medical statistic—life expectancy, infant mortality, cancer, diabetes, heart disease, and so forth.
So, what is the problem with American healthcare?

Is it our inefficient medical bureaucracy, where 2 to 3 million Americans are employed by medical providers and insurance carriers—not to deliver healthcare, but merely to pass the buck for that care to someone else?

Is it the cost of medical malpractice insurance, which adds more than $27 billion a year to the cost of providing healthcare—enough to pay annually a high-deductible insurance premium for more than half of the 45 million Americans without health insurance?

Is it our employer-based system, whereby the ultimate providers of healthcare for most people (employers) have little incentive to spend even $1 today on wellness and preventive care in order to save $100 tomorrow—because the odds are that the employee will be long gone or receiving Medicare by the time serious diseases like cancer and heart disease develop?

The partial answer is yes to all of these questions, but the main reason Americans spend two times what they should on healthcare is not because of something wrong with American healthcare.

Today, more than 61 percent of Americans are overweight or medically obese—a figure that has doubled since the 1980s. Being overweight is just one of the symptoms of having a terrible diet—most Americans are also deficient in the basic vitamins and minerals necessary to keep their minds sharp and avoid major diseases like cancer.

If you are overweight or obese, please get immediate help in changing your lifestyle. Already, 59 million Americans have diabetes or prediabetes, mostly due to being overweight—if you are one of them, you have a 65 percent chance of dying from heart disease or stroke. Moreover, before
you die, if you are obese, you will likely consume much of your estate in medical expenses and will needlessly and selfishly be torturing those you love the most.

Ways to Reduce Your Pharmacy Bill

There are plenty of ways you can reduce your pharmacy bill. The Cost Containment Research Institute (www.institutedc.org) has compiled a list of 17. Here are a few ideas for you to consider:

• Shop around by phone. Make a list of your medications, including strength and number taken daily, and call at least six pharmacies to compare prices, keeping in mind whether the pharmacies are on your plan.
• Use a pill splitter (but do your research first). Many drugs are cheaper if you buy them in larger doses, then cut them in half. Ask your pharmacist or doctor first, though, since many drugs cannot be split without reducing their effectiveness. Most pharmacists say you should split only pills that are scored (i.e., those with a predesigned breakoff line). However, Toby Rogers from Rxaminer says, “We split a lot of pills that aren’t scored; you should be able to split pills that aren’t a ‘long acting’ type or encapsulated.”
• Save by buying a 90- versus a 30-day supply. Most pharmacies offer higher savings if you buy a larger supply. In addition, people with insurance prescription coverage may save even more by getting a larger-day supply.
• Over-the-counter drugs may be as effective as the prescription drugs. Most prescription cold medications average $20 to $60 for a onemonth supply and contain the same decongestant that is available over the counter for less than $2. Some doctors still prescribe 20-milligram Pepcid to their patients, which can cost $60 for a onemonth supply. Pepcid AC comes over the counter in 10-milligram strength; taking double the dose costs approximately $23.
• Stop using drugs you no longer need. You should review all your prescriptions with your doctor at each visit. You may be taking drugs you no longer need. Also, report any side effects and ask questions about possible drug interactions. Don’t hesitate to ask your pharmacist questions; it’s free and can often save you money.
• Take only those drugs you really need. When your doctor prescribes medication for you, make sure you understand exactly what it’s meant to do and for how long. If you are prescribed two drugs for the same symptom, ask whether you really need both; if you develop new symptoms ask your doctor if the prescribed medicine could be causing it.
• You may qualify for a free drug program. There are over 1,100 drugs that are made by 100 manufacturers that have free drug programs. Most major drug companies provide free medications but rarely, if ever, publicize their programs. An estimated $2 billion worth of free medication is given away annually. You can get a complete list of drugs and manufacturers’ programs at www.institutedc.org.
• Veterans have their own drug benefits. Recent laws grant veterans medical benefits for certain illnesses, like diabetes and hypertension, provided the veteran is subject to qualifying conditions such as Agent Orange exposure. Check with the Veteran’s Administration to see whether you qualify for benefits.
• Buy home test kits. Kits for determining ovulation, pregnancy, and colorectal cancer can be purchased as home tests at half the price of similar kits from your doctor’s office.
• Look for special deals by local governments. You can save on prescription drugs through special deals offered by state and local governments and even religious organizations. The states of Illinois, Kansas, Missouri, Vermont, and Wisconsin have initiated a web site where residents can buy 100 commonly used drugs from Canada, Britain, and Ireland at a discount of anywhere from 25 to 50 percent. The address for the site is www.i-saverx.net.

Tips for Shopping Overseas Pharmacies in US

PharmacyChecker.com is one of the best web sites for checking out prices from quality pharmacies overseas, as well as the quality of an individual pharmacy itself. Tod Cooperman, M.D., who founded PharmacyChecker.com, has the following tips for shopping overseas for
prescription drugs:

1. Shop from Canada. As long as the pharmacy is licensed in Canada, there should be no concerns about the quality of the drugs. They are as good as what you would purchase from a U.S. pharmacy, and in fact many are manufactured here.
2. Look beyond Canada. High-quality prescription drugs are also available from Australia, the EU countries, Israel, and New Zealand. These countries have drug regulations equal to or better than those in the United States.
3. Use Pharmacychecker.com to monitor the quality of foreign pharmacies. The site is free to explore and paid memberships are available for more in-depth information. The web site does not accept funding from pharmaceutical companies, but pharmacies do pay to be rated voluntarily. Pharmacychecker.com does not receive any money on sales.
4. Be secure. Read the fine print on any web site before you enter your confidential information—the general rules for privacy in the United States do not apply to overseas pharmacies.
5. Avoid buying drugs advertised in spam e-mails and pop-up ads. Cooperman says these companies are impossible to trace.
6. Don’t expect to save on generic drugs from other countries. Generic drugs are actually cheaper in the United States than in Canada, since Canada sets its prices on generics from a two-competitor system, whereas the United States has a free-market system with as many as 12 companies selling generics.
7. Watch for counterfeit drugs. If you’re dealing with a reputable pharmacy, counterfeits should not be a problem. However, examine your pills when they first arrive to see whether they look different from those you normally get. If they crumble or if the consistency seems different, take it as a warning.
8. Remember to calculate shipping costs. To save on shipping, buy larger quantities, such as a 90- versus a 30-day supply, if you expect to be on the drug for at least that long

Some Factors to Consider when Purchasing a Disability Insurance

Here are some factors to consider when purchasing a disability insurance policy, either through your employer or by yourself.

• “Own occupation” or “any occupation” What is the definition of disability in your policy? Does it mean being able to work in the occupation in which you were engaged when you became disabled, or in any occupation? For example, if you are a surgeon who injures your
  hand and can no longer work as a surgeon, perhaps you could work as a teacher. The tighter the definition of disability, the higher the monthly premium.
• Guaranteed renewable and noncancelable. Look specifically for these two clauses in any individual policy, and don’t expect any guarantees past your plan year from an employer-sponsored group policy.
• Tax-deductible premium or tax-free benefits. In general, if your premium is paid by your employer or yourself (with an FSA, discussed later in the chapter) with pretax dollars, disability benefits are taxed as income when you receive them. If your premium is paid with after-tax dollars, benefits are not taxed when you receive them. The conventional advice in the insurance industry is to pay your premium yourself or with an after-tax payroll deduction so disability benefits are not taxable income when you receive them, as that is when you will need the extra income the most.
• Elimination period. This is the amount of time you must be disabled before benefits begin, typically 90 to 180 days, which is often covered by a short-term-disability policy. Some states have mandated state short-term-disability coverage, so check before you buy any—residents of California, Hawaii, New Jersey, New York, and Rhode Island are guaranteed their full after-tax salary (up to a reasonable maximum) for 6 weeks if they become disabled, then 50 to 60 percent for 20 more weeks.
• Supplemental or overlapping coverage. Some policies guarantee you a fixed benefit, say $5,000 a month, reduced by any benefits you received from government entities like Social Security. This is usually a good option to lower your current premium, since it shifts the risk of ever obtaining government benefits onto your private disability carrier. Do not depend on Social Security or any governmentmandated disability benefits when you calculate your disability requirements.
• Premium waiver, partial disability, and so on. Premium waiver specifies that your premiums will be automatically paid when you are receiving benefits. Partial disability specifies your benefits in case of only partial disability. These and other terms should be reviewed with your benefits administrator or an insurance agent licensed to sell disability
  insurance.

8 Things to Look for an Agent of Individual Health Insurance

Here are eight things to look for when picking an agent or agency to represent you or your employees in purchasing an individual/family health insurance policy:

1. Shopping. If you like to shop online, the agent should have an online web site where you enter your family information to get instant online price quotes on different policies offered by different carriers. This allows you to shop at your leisure until you are ready to make a decision. A good online insurance web site will not ask for your name or contact information until you have seen quotes and are ready to choose a policy.
2. Appointments. Agents you contact should be appointed to sell health insurance from several or most of the major health insurance carriers in your state—and they or someone at their agency should have a professional relationship with the underwriters at each carrier.
3. Knowledge. The agent should know and be able to clearly explain all of the information contained in this chapter.
4. Selecting a carrier. Should you or a family member have or have had a health issue, the agent should know which carriers in your state may have a bias against certain preexisting conditions. Once a carrier is selected, the agent should be able to contact the carrier without mentioning your name and ask the underwriters whether your medical issue raises any red flags.
5. Access. You should be able to speak to the agent or a licensed associate on the telephone or via e-mail at your convenience, or to visit that individual in person. Your health information is personal and confidential, and you should feel secure when sharing it with
   someone.
6. Monitoring. The agent or agency should have a process in place to monitor your application once submitted and, after consulting with you, be able to withdraw your application or amend it before it gets formally rejected, uprated, or approved with an exclusionary rider.
7. Negotiation. The agent should have a personal style and communication ability that makes you feel comfortable—as he or she will be the one representing you to the underwriter if you have an issue with your application.
8. Volume. The agent or agency should be a significant producer of policies for the carrier selected. This will enable that person to better negotiate on your behalf during the underwriting process and to help you solve issues with the carrier at a future date.

How Underwriters Verify the Information on Your Application

Underwriters have several tools at their disposal to confirm information provided by prospective applicants.

The Medical Information Bureau

Insurance underwriters often check the information you put on your application against your Medical Information Bureau (MIB) report. Your MIB report is to your medical history what your credit report is to your financial history or what a Dun & Bradstreet rating is to the creditworthiness of your business. MIB, a central database on the health history of tens of millions of Americans, is shared by approximately 600 life and health insurance companies.

When you apply for individually underwritten life or health insurance, or when you participate in a group insurance plan in which an insurance carrier underwrites the health of your group, you typically give the underwriter permission to send your health information to the MIB. MIB keeps information on file for seven years.

MIB is not subject to HIPAA privacy regulations, but MIB is a consumer reporting agency subject to the Fair Credit Reporting Act. As with a credit report, if you are denied insurance based on an MIB report, you are entitled to a free report and the opportunity to have any erroneous information corrected.

Telephone Verification Calls

Most carriers do telephone verifications of the information on your application. After you apply, you should expect to receive a telephone call from the insurance company to verify at least a few questions on your application. A verification call is always recorded and is typically with a juniorlevel employee rather than with a senior underwriter with whom you can discuss your health issues.

Requests for More Information

If you have checked yes to any of the hundred or so checklist questions on specific diseases or treatments, the underwriter may request a specific medical report from one or more of your medical providers. This is usually done without your knowledge since your signature on the application gives the underwriter permission to obtain this information and gives the medical provider permission to share it. It also typically gives the underwriter permission to share such information with the MIB.

About 5 percent of the time, the underwriter is not comfortable with the paper trail of your medical history or wants a professional to examine you for a specific issue and requests an Attending Physicians Statement (APS). In such a case, you are directed to see a local physician for a medical exam, or a doctor who has seen you recently is requested to send his or her medical notes to the carrier.

What Health Insurance Companies Look For in Your Application

Health insurance companies make their money over the long run by rejecting applicants who are likely to have large medical expenses that will cost more than those people will ever pay in premiums. Conversely, insurance companies want to accept applications from people whose medical expenses are likely to be average or below average. Think about health insurance from the perspective of a carrier—unlike your employer, a health insurance carrier is a privately owned company with whom you have no relationship. When you apply for an individual/family policy you are asking a third party to take an amazing risk on your continued good health.

If a carrier accepts you for, say, a policy costing $300 a month, it will probably receive about $9,000 in premiums from you over the 30-month average life of an individual/family policy—and pay out about $2,500 in claims for a healthy family during this same 30-month period ($1,000 a year). The carrier will also have to pay a commission of typically 6 to 20 percent on the first-year premium if you were represented by a health insurance agent. The gross profit per policy in this case is about $6,100 ($9,000 premium – $2,500 claims – $400 commission = $6,100).

If you or a member of your family develops a problem with your health, you are probably going to keep your policy for a lot longer than 30 months—since you won’t be able to get a job while you are ill or get cheaper health insurance anywhere else while you have a preexisting condition. Your treatment might cost $10,000, $50,000 or even $100,000 for each year you keep the policy until you hit the lifetime maximum of $1 to $5 million. Insurance companies will go bankrupt if they accept too many people with preexisting conditions who are likely to cost the company far more than they pay in premiums.

It is also very important that your application be complete and accurate before it goes to the underwriter for review. In this example, the carrier makes a gross profit of $6,100 if your family stays healthy; conversely, it potentially loses from $1 million to $5 million when it insures someone whose health deteriorates or who has an accident. The carrier has to sell 820 policies to healthy families to cover the cost of one family who hits a lifetime max of $5 million (820 × $6,100 = $5 million). The general rule of thumb when it comes to underwriting health insurance applications is “when in doubt throw it out”—meaning the underwriter will not consider an application with incomplete or confusing information.

Comparing Different Health Insurance Policies

The most useful comparisons entail first estimating your future healthcare needs and then reviewing the major features of each policy item by item.

Estimating Your Future Healthcare Spending

To compare different health insurance policies, you have to first make assumptions about your future healthcare needs. If you haven’t had a major illness recently, the best way to do this is to look at what you spent on medical care last year. After you have prepared this list, think carefully about the health of each family member and estimate what you might spend next year.

You should be able to come up with your exact out-of-pocket expenses for healthcare last year (including your health insurance premium) and an estimate of next year’s spending (assuming you keep your current health insurance).

Comparing Policy Features

Once you have estimated what you may spend next year, you need to collect the following basic information for each policy you are considering. All of this information should be readily available in any brochure or web site describing an individual/family policy. Once you have the information, make up your own worksheet similar to the one shown here.

TIP: There is no way to financially compute the lifetime max amount you will need, since very few people ever come close to using this much money in healthcare. Ultimately, buying insurance (protection) is more about purchasing peace of mind than about securing a financial return; only you can value the peace of mind you get from having a given lifetime max on your health insurance. In general, if you don’t expect to keep the policy for a long time because you are over age 60 and approaching Medicare eligibility, a lifetime max of at least $1 million should be sufficient.

What to Look for in a Health Insurance Policy

Once you have selected some policies to analyze, look at these six major financial items in each policy:

1. Doctor Visit Co-pay or Discount. The doctor visit co-pay is the amount that you pay each time you visit the doctor. In a traditional low-deductible plan, this ranges from $10 to $30 per visit per patient. Most higher-deductible plans do not offer any doctor co-pay, but do offer substantial network discounts off the $100 or more standard doctor visit fee. When considering a plan without a doctor visit co-pay, you should phone your physician first to ask how much you will pay per doctor visit (typically 30 to 50 percent off a typical $100 fee per doctor visit).
2. Prescription Co-pay or Discount. This is the amount you will pay per prescription filled. Most healthcare plans offering pharmacy coverage break their coverage into three tiers: generic, formulary brand, and nonformulary. A typical plan for a 30-day prescription might charge a $10 co-pay for a generic drug, a $20 co-pay for a formulary-brand drug that is on a list (the “formulary”) maintained by the carrier, and a discount from full retail for a drug that is neither generic or on the formulary list. There is no standard pharmacy coverage, so the only way to know what you will pay is to ask your carrier or look up your prescription on its web site.
3. Annual Deductible. This is the annual amount of your medical expenses that you must pay before your health insurance company begins paying providers or reimbursing you for claims. Traditional healthcare plans have deductibles of up to $1,500 as well as co-pays for doctor visits and prescriptions. Highdeductible plans have deductibles from $1,000 to $10,000—but much lower premiums.
4. Out-of-Pocket Annual Maximum. Coinsurance is the amount, typically about 20 to 30 percent, that most insurance carriers expect you to pay on your annual medical expenses after you have met your deductible. Fortunately, most coinsurance clauses have an upper limit of about $10,000. Your maximum coinsurance obligation, plus your annual deductible is called your OOP max—referring to the maximum out-of-pocket annual expense you could incur under the policy. Some newer high-deductible plans, including many HSA plans, do not charge you coinsurance; they pay 100 percent of your medical
   expenses once you have met the deductible
5. Lifetime Maximum Coverage. This is the maximum amount of benefits that could be paid out over the life of the policy. Some states require individual/family policies to have a certain lifetime maximum—California requires all individual/family policies to have a lifetime maximum coverage of at least $5 million per person. You may not think today there is a big difference between a $1 million and a $5 million lifetime maximum, but you might think differently if you needed an organ transplant, which typically requires decades of expensive follow-up treatment.
6. Premium. This is the monthly amount you will pay for the policy and the options you have chosen. It is often paid quarterly, in advance, or monthly, with required automatic drafts from your checking account.

The Two Major Components of Health Insurance

Health insurance is different from all other types of insurance. When you buy life insurance, automobile insurance, or homeowner’s property and casualty insurance, you do not expect to have a claim in the near future.

You purchase these types of insurance for financial protection against the occurrence of an unlikely event that you wish to avoid—like a death, an auto theft, or a fire. If such an event occurs, you generally receive money that you are free to spend any way you wish.

In contrast, with health insurance, you expect to have claims in the near future and you almost never receive money when you have one. Instead, your insurance carrier directly pays the medical providers that have taken care of you—typically paying them either a flat monthly fee or a small fraction of what they would charge you directly if you didn’t have health insurance.

This is because what we call “health insurance” in the United States consists of two separate but related components:

1. Access to a network of physicians, hospitals, and other medical providers who provide services at greatly discounted rates
2. Financial protection against the medical expenses of an accident or illness.

Here’s the first question you need to ask when choosing a health insurance policy: “How good is the network of doctors included in the plan?” Your policy won’t do you much good if you don’t like the physicians it covers, or if it works only at a hospital many miles from where you live.

Once you have located a few policies that offer access to the medical providers you desire, you need to analyze the financial protection offered by each policy—the monthly premium and how much you will pay out of pocket under different potential scenarios, from a routine physical exam to a catastrophic illness.

Why Haven’t I Heard of Individual/Family Health Insurance?

There are many reasons that most people haven’t heard of individual/ family health insurance policies:

• Simple inertia precludes action. The majority of people living in the United States today have always received free or low-cost employersponsored group health insurance as a job benefit. Most people are unaware that better options exist because they have never had to go looking for them.
• Families used to be covered by employers. Until recently, most employers providing employee health insurance included free or heavily subsidized coverage for the employee’s spouse and children. Today most private employers charge employees 50 to 100 percent
  of the cost for insuring their spouse and children. Many employees aren’t aware they are paying from half to all of the cost and not just a co-payment.
• Employers won’t tell you. If you are currently paying your employer for the cost of insuring your healthy spouse or children, your employer doesn’t want you to know about much less expensive individual or family health insurance. The $4,000 or more you pay in annual premiums for your family goes to support other, less healthy group members. Your employer’s group health insurance premium would increase dramatically if healthy people were to leave the group.
• People think individual or family policies cost more. The average cost of an individual/family health insurance policy used to be higher than the cost of an employer-sponsored policy, but today it is less than half the pro rata cost of a group policy in most states.
• U.S. income tax laws did not encourage it. Until recently, people wanting to purchase their own individual or family health insurance had to earn almost $2 of pretax income to have $1 left over to pay their health insurance premium. As explained in Chapters 11 and 13, this is no longer the case now that employers are allowed to reimburse employees tax-free for health insurance premiums on individual and family policies. In addition, health insurance premiums only recently became 100 percent tax-deductible for self-employed people.
• Insurance carriers don’t advertise. Advertising the availability of individual policies attracts mostly applications from unhealthy and/or unemployed people who typically do not qualify for, or cannot afford, individual health insurance. These applications are expensive to process and can cause regulatory problems for the carriers when most of them are rejected. Instead, carriers rely on a select group of agents who are trained to send in applications only from healthy applicants who can afford the premium.

Obtaining Individual/Family Health Insurance

Individual and family policies may be purchased directly from an insurance carrier or through an insurance agent licensed to do business in your state and appointed by insurance companies to represent them. A good place to start is an online search engine like www.ehealthinsurance.com or www.extendone.com, which provide quotes for thousands of policies from many different carriers.

TIP: Be careful when you shop online for health insurance, and watch the fine print. Most web sites offering “online quotes” request personal contact information and then don’t deliver any online quotes—they sell your information to third parties along with your express permission to phone you. A good online insurance web site will not ask for your name or contact information until you have seen quotes and are ready to choose a policy.

Insurance companies are legally required to charge the same premium whether you purchase your policy directly from the carrier or through a licensed health insurance agent. You should always get quotes from several carriers before choosing a policy, and choose an agent appointed by several of the major carriers in your state, particularly if a member of your family has a health issue.

As we know, employers offering employee health benefits and their insurance companies must blindly accept every applicant regardless of their health—which is why employer-sponsored group policies are so expensive. In contrast, in almost all states, individual/family insurance
carriers may choose the individuals whom they accept after analyzing the health risks of each family member applying for coverage. This process is called underwriting. The underwriter for an insurance company examines the healthcare experience, age, current health, family history, and lifestyle for each member of your family. The underwriter then makes three decisions
regarding your application:

1. Acceptance. The underwriter may accept your entire family, or accept only certain members of your family, based on their assessment of the health risk of each individual.
2. Uprating. If the underwriter decides that a member of your family poses a moderate health risk, the underwriter may accept your application with a typical 15 to 200 percent rate increase over the normal monthly premium for a healthy individual in your age group.
3. Exclusions. The underwriter may accept your application with exclusions for “preexisting conditions” for one or more family members. For example, if you have a child with moderate diabetes, certain carriers will accept your child excluding all claims related to, or resulting from, diabetes. Such preexisting conditions may be excluded for a certain period of time or for as long as you keep renewing the policy.

What Is Individual/Family Health Insurance?

An individual or family health insurance policy is a policy purchased from an insurance company or government entity covering a single individual or selected family members.

The terms individual policy, family policy, individual and family policy, individual/family policy, and individual or family policy all mean the same thing—a policy purchased by a consumer directly from an insurance carrier (similarly to auto insurance) covering an individual or a family. (The terms policy, plan, company, and carrier are also used interchangeably and mean the same thing.)

There are two main differences between employer-sponsored “group policies” and individual or family policies:

1. Employers and their group-policy insurance carriers are legally required to accept all applicants regardless of their health. In contrast, insurance carriers offering individual
   policies can reject applicants with preexisting medical problems, and therefore can typically offer far lower rates to healthy applicants (except in five states).
2. The premium paid by employers for their group policies is typically increased every year based on the previous year’s healthcare costs of the employee group. In contrast, the premium you pay for an individual or a family policy cannot be raised each year, nor can the policy be canceled based on your health or your prior year healthcare costs.

When you purchase an individual health insurance policy, you become a member of an insurance “group.” But it’s not the relatively small group limited to the employees of one company—it’s the large group of people in your state who purchased a similar policy from the carrier in a given time frame.

Monthly premiums paid for individual policies typically increase annually with the level of inflation or overall medical costs. The insurance carrier is allowed to ask the state insurance regulator for a rate increase based on the actual prior year’s health costs for everyone in your group.

However, unlike with employer group policies, these groups of individuals are so large that even the catastrophic illness of hundreds of members would not result in a significant increase in your monthly premium. In contrast, in a small company, if one of the employees gets an extremely expensive illness like diabetes or cancer, the following year the carrier could double the cost that employer is paying for health insurance.

Many companies are forced to pass increased costs on to employees or drop health insurance coverage because of catastrophic employee illnesses. Huge, sudden increases in health insurance costs can’t happen with individual/family health insurance because your “group” is so much larger.

Unlike employer-sponsored health insurance, individual and family health insurance is real “insurance” because it “guarantees protection or safety.” As long as you pay the premium, your policy cannot be canceled nor the premiums increased just because you lose your job, change jobs, or have a catastrophic illness in your family.
As with employer-sponsored health insurance, individual or family health insurance also includes access to a network of medical providers who charge 15 to 90 percent less to those in the network than to those outside the network, or to those who have no health insurance.