In my daily efforts as a broker with Colorado Health Insurance Brokers, I speak with a number of people and respond to questions pertaining to individual as well as group coverage. I want to post these questions and my answers for others to access. While the answers for may vary with different insurance carriers, I will try to be as general as possible. Here are a few of the more common questions:
Q: What is Individual Health Insurance versus Group Health Insurance?
A: Individual health insurance is purchased on an “individual” basis rather than as part of a group. This term does not mean that it is for one person, but rather is purchased for one person or for an entire family.
Q: Is small group health insurance (1-50 employees) more or less expensive than individual health insurance coverage?
A: As a rule, small group health insurance is usually more expensive than comparable individual plans. While there may be exceptions for individual plans, in most cases individual coverage is often as much as half the cost of group coverage. This is due to the fact that the benefits often differ (group plans typically cover maternity, whereas only a few individual plans offer quality maternity coverage) and also that the applicable laws governing group and individual coverage differ substantially.
While individual coverage is subject to underwriting and is a viable option for people with average to above average health; group insurance can not deny coverage or place exclusionary riders on people with pre-existing health conditions. Group rates reflect this difference, as well as the fact that a higher level of customer service may be required for a group plan with numerous employees versus an individual policy with one person or family.
Q. Is a lapse in coverage a big deal?
A. Yes, a lapse of more than 63 days can allow the carrier to enforce a pre-existing waiting period for both group and individual policies that may last from 6 to 12 months. Letting health insurance lapse is never a good idea. Murphy’s Law dictates that the one week you don’t have coverage is precisely when you will slip on the ice or suffer some other unforeseen illness or injury. Don’t let it happen to you!
Q: How long does it take to get an individual insurance policy once I apply?
A: In my experience, most insurance companies average 5-7 business days to issue a policy. However, this may vary depending on the company and health of the applicant. It may also take longer for a company to complete the underwriting review process if they need additional information or if they choose to review medical records.