How to buy your own health insurance
Seattle Times staff reporter
It's one product that consumers would rather not have to buy and companies sometimes would rather not sell.
But for those who are going without, few things are coveted more than affordable individual health insurance.
Unique among the world's population, the majority of Americans receive health coverage through their employers. But a sharply growing number of people — including some 644,000 in Washington — have no insurance at all.
In this state, the latest figures show 10.7 percent of residents are without health insurance — up from 8.4 percent just two years ago.
While many are self-employed, the rest don't have jobs or are workers whose employers don't provide insurance or require them to pay for a big share of the premiums.
The good news if you lack coverage is that insurers in Washington once again are selling individual health plans. The state's three largest carriers, Premera Blue Cross, Regence BlueShield and Group Health Cooperative, abandoned the market in 1998 and 1999 after losing tens of millions of dollars paying out claims.
The bad news: Shopping for health insurance on your own can rival calculating tax returns in its complexity.
And there's no guarantee that you'll even be able to buy the plan of your choice: You must complete a health questionnaire with more than 280 probing queries designed to weed out the sickest people, who don't qualify for private coverage.
Even worse: Rates are rising steeply because of higher health-care costs. Some people who have individual plans with Regence, for instance, will pay as much as 24 percent more in premiums when new rates go into effect Jan. 1.
Here's a primer on buying health insurance:
Who sells individual plans?
In the Puget Sound area, coverage is available primarily through just three private carriers: Regence, Premera and Group Health. The dearth of choices reflects the size of the market; just 6 percent of the state's residents are covered by commercial individual policies.
Low-income people who earn too much for free Medicaid coverage can buy Basic Health, a state-subsidized plan. Another public plan, Washington State Health Insurance Pool, insures the 8 percent of people who apply for private coverage but fail the health survey. That high-risk pool coverage is pricey, although subsidies are available for people who earn up to three times the federal poverty level.
How much are premiums?
This is like asking, "How much does an automobile cost?" Monthly rates vary widely, ranging from nothing for some children covered by Basic Health, to $970 for a 60-year-old enrolled in the high-risk pool.
Among the private carriers, Regence offers plans with some of the lowest rates even with its new price hikes. But premiums range greatly even within each insurer, depending on your age, smoking status, benefit levels and deductibles.
For instance, a 39-year-old nonsmoker who buys Premera's preferred-provider plan (where you go to designated doctors and hospitals) with a $500 deductible will pay $215 a month. But you can shave $20 a month, or $240 a year, by upping the deductibles to $1,000.
Higher deductibles are good choices for people who expect to use little, if any, medical services.
Another way to reduce your premiums is to opt for plans that cover a smaller portion of your medical costs. For that same 39-year old, some Regence plans that pay 80 percent of the bills cost about $25 a month more than plans that cover 70 percent of the costs. You'd have to do some calculations on your recent medical bills to figure whether this would pay off for you.
Young adults under 23 can get dependent coverage if they rely primarily on their parents for support. That's cheaper than getting a separate coverage.
Basic Health has sliding premiums based on family income. Rates for adults range from $10 a month for those whose earnings fall just above the federal poverty level to $207 for a 55-year-old whose gross annual income is less than $17,720.
Which plan is right for you?
Basic Health, if possible: For the working poor, especially those with children, Basic Health should be the first option. It contracts with eight private health plans to provide comprehensive coverage (your choices are limited because not all plans are available in every part of the state). That includes hospital and doctor visits, maternity services, skilled nursing and pharmacy benefits; some services require a co-pay (such as $100 for each hospital admission) while others (like preventive care) do not.
The state subsidizes a portion of your premiums (which can vary from plan to plan, and from county to county), based on income.
If you meet the income guidelines, Basic Health's rates can't be beat.
Basic Health is also the only individual health plan that does not require applicants to complete a health screening survey. You cannot buy private insurance if you are among the sickest 8 percent. You can opt for coverage from the high-risk pool, but at much higher premiums.
If you're instead choosing among private plans, consider these issues: Would lower premiums justify higher deductibles? Do the doctors and clinics that you want belong to the plan's provider network? How much of your medical or prescription costs does the plan pay? How long would you have to wait to receive coverage for a pre-existing medical condition? Again, do your math.
Are individual plans stingier?
Compared with some employer-paid group insurance, benefits under individual health plans are much more limited.
None of the plans from Premera, Regence and Group Health, for instance, includes coverage for mental or psychiatric conditions (Basic Health and the high-risk pool plan do). Routine eye, hearing and dental services also are generally excluded.
Some catastrophic plans with very low premiums do not cover prescription drugs or maternity care.
Should you switch from your COBRA plan?
Most people know that under federal COBRA law, laid-off workers have the right to stay on their former employer's health plan for up to 18 months. What few realize is the true cost of those group plans — or that the insured must start paying the full premiums, plus a 2 percent administrative fee.
One alternative is to opt out of your former employer's plan and switch to more bare-bones individual coverage on your own.
However, if you do that before your 18 months of COBRA is up, you will have to take the health survey.
Another money-saving tip
If you expect to land a job quickly — or have already landed a job but don't yet qualify under your new employer's health plan — you could hold off paying for your COBRA coverage. That's because you have at least 60 days to notify your former employer that you want to continue with COBRA. Your coverage would be reinstated retroactively when you pay the premiums.
If you enroll in a new employer's plan at any time during that period, you could skip paying for COBRA coverage you didn't use (provided that you didn't get sick or need medical care in the meantime).
However, you must use extreme care to follow the deadlines, including keeping any postmarked correspondence. If you allow your health coverage to lapse for more than 63 days, you could be subject to a waiting period before you can enroll in a new plan.
Kyung M. Song: 206-464-2423 or firstname.lastname@example.org.