Civilian Health Insurance for Dummies
Part III: How to find a plan that fits your budget and needs.
By J.J. Montanaro

Do you feel sick just thinking about health insurance? It’s time to turn your queasiness into action, especially if you’re one of the growing number of Americans without health insurance.

There are options that can fit your budget and health needs. The cost depends on your circumstances, like where you live, how healthy you are and whether you’re male or female.

See which one of these plans fits your situation, and use the health insurance glossary to wade through the terms.  

The Just-in-case-I-get-sick Plan (aka Short-term Insurance)

WHO: If you’re a student who is no longer on your parents’ policy or you are graduating from college, short-term insurance covers the gap. It’s also helpful for those between jobs or those waiting for benefits to start on a new job.

COSTS: Depending on where you live, your monthly cost (or premium) may start at less than $50. Your deductible (or out-of-pocket costs before insurance starts to cover your expenses) could be as low as $500.

PROS: You can pay month to month.

CONS: Only temporary. Most plans will cover you for 12 months or less. They often do not cover preventive care, such as yearly physical exams.

HOW TO GET IT: Before you graduate and go off your parents’ policy, shop for student health insurance, which may be available through your college or university. If you’ve already graduated, you can purchase short-term policies directly through health insurance companies.

The I-may-get-sick-in-the-future Plan (aka Permanent Individual Insurance)

WHO: If you support yourself through freelance work, temping or running your own business, look into permanent individual plans that offer long-term coverage.

COSTS: A monthly premium can begin around $100 with deductible as low as $2,000.

PROS: The variety of plans available lets you pick and choose the benefits you want, such as your doctors and hospitals.

CONS: The price of individual health insurance varies widely and can have a high deductible. Before you start your insurance search, ask yourself two questions: Do I need prescription drugs? Is there a particular doctor I want to continue seeing? Figure out what you want and need, and then shop around.

HOW TO GET IT: First, find out if your alumni association, place of worship, or a professional organization to which you belong offers access to health insurance. Your premiums and out-of-pocket costs could be lower. Then, go online to such sites as Tonik.com, Assuranthealth.com, and eHealthInsurance.com to see what plans are available in your ZIP code. These resources let you compare options. Make sure that you do business with a reputable, well-known company that has a strong network of doctors and hospitals.

The I-know-I’m-going-to-get-sick Plan (aka Individual Insurance)

WHO: Insurance companies may do their own investigation of your health history before offering an individual health plan — a process known as medical underwriting. That means that if you have an ongoing illness or medical condition, such as asthma or diabetes, you could face a challenge finding coverage. In insurance lingo, this is known as having a pre-existing condition.

COSTS: Generally, it is difficult to estimate typical insurance costs related to pre-existing conditions.

PROS: There are insurers who will provide coverage, although there may be certain restrictions. For example, they may impose a “pre-existing condition exclusion period” in which they will not cover treatment related to your particular health issue for a certain length of time, usually 12 months.

CONS: Some insurers may reject your application or charge higher premiums.

HOW TO GET IT: Speak with a reputable insurance agent or broker to explore your options. Also, check with your state’s insurance commission. Most states have high-risk insurance pools that provide coverage to individuals with pre-existing conditions.

The I-probably-won’t-get-sick Plan (aka Catastrophic Coverage)

WHO: Catastrophic coverage is another name for lower-premium, higher-deductible individual plans. As the name suggests, these plans provide coverage if something happens to you that requires major medical care.

COSTS: Monthly premiums range from $30 to $175 with deductibles from $500 to $20,000.

PROS: Lower-cost coverage provides some protection if you have a serious injury or illness.

CONS: Most catastrophic plans offer bare-bones coverage and extremely high deductibles. That means higher out-of-pocket expenses for doctors’ visits and prescription drugs.

HOW TO GET IT: Sort through individual policies with higher deductibles and lower premiums.

The I’ll-never-get-sick Plan (aka No Insurance)

Whatever your age and health, going without coverage is a bad move, no matter how invincible you feel. Period. A trip to the ER for knee surgery can quickly add up to $10,000 or even higher. A ruptured appendix or other emergency surgery can cost more than $30,000.

There’s a reason why bank-breaking medical bills are the leading cause of bankruptcy in the United States. It’s very expensive to get sick when you are not insured. 

Learn the Lingo

Here’s a quick boot camp on the basics of health insurance terminology. 

Co-insurance
The percentage of coverage you are expected to pay yourself. For example, if the policy’s co-insurance is 80/20 and the medical bill is $100, insurance would cover $80 and you would pay $20 until you reach an out-of-pocket maximum, then the insurance pays 100 percent. Typically this type of arrangement is common with Point of Service (POS), Preferred Provider Organizations (PPO) and indemnity plans.

Co-payment or Co-pay
Normally part of HMO/PPO type plans. Usually a fixed-dollar amount you’re required to pay to receive services. Typical co-pays might be $15 for a doctor visit or prescription, and $100 for a trip to the emergency room.

Deductible
For non-HMO or POS out-of-network care this is the amount you pay toward your health care before insurance begins covering eligible medical costs. As a general rule, the higher the deductible, the lower the plan’s premium will be.

Health Savings Account
This type of account is paired with a high deductible health plan and allows you to set aside pre-tax money for future health care expenses. Withdrawals from the account are tax-free if used for qualified health care expenses. There are a host of specific requirements and limits, but the HSA can be a nice addition to your health insurance plan.

Medical Underwriting
A process in which an insurer investigates and reviews your health history when you apply for insurance. The findings help insurers figure out the future risk of you getting sick, which affects how much you’ll pay in premiums.

Out-of-pocket maximum or stop-loss
This limits how much of your care you will be responsible for in a single year. Like a deductible, the lower the stop-loss, the higher the monthly premiums.

Pre-existing Condition
A medical condition or diagnosis that existed — or was treated — before your health insurance coverage began. It may affect whether you can get coverage or care for a specific condition.

Premium
Regular payments you make in order to have insurance coverage or belong to an HMO.

Primary Care Physician (PCP)
With HMO, POS, and PPO plans the PCP is your “go-to” physician. He or she will have to be consulted prior to seeing specialists within the network of providers. Sometimes known as the “gatekeeper.”