Ask Kim


What 's Changing if You Buy Health Insurance on Your Own

Kimberly Lankford

The timeline of health-reform changes and some of the protections are different for people who buy coverage on their own.



In your most recent column, you talked about how the provisions of the health-care-reform law that took effect on September 23 would affect people with health-insurance coverage through their employers. How will these new rules affect people who buy health insurance on their own?

Many of the changes in health-insurance coverage for individuals are similar to those for people who are covered through their employer, but the timeline is different. Employer-provided plans have a standard open-enrollment period and renewal date, and most of the changes in employer plans will take effect on January 1. But the renewal schedule for individual plans varies depending on when you bought the policy. The changes will take effect whenever the individual plan renews after September 23 -- which could be very soon or many months from now. Ask your insurer when your policy renews.

A few of the new consumer protections will be a bit different, too, because of existing rules about who can be rejected under individual policies. Most employer policies have always provided coverage for employees and their families regardless of their health. But when you buy a policy on your own, the insurer can still reject you or charge a higher rate based on your medical condition -- a process called underwriting. (Starting in 2014, insurers will no longer be allowed to reject anyone because of their health.)

For example, the rules about offering dependent coverage to children up to age 26 are more complicated if you have an individual policy. With employer policies, you can now add any child up to age 26 to your coverage, regardless of their health or previous coverage, as long as they don’t have a job that offers health insurance. But if you have an individual policy, the insurer is required to offer dependent coverage to children, regardless of their health, only if they had been covered by your policy in the past, says Brian Mast, vice-president of communications for eHealthInsurance.com. “If they were never on your policy, you may still be able to add them,” says Mast. “But health reform does not require the insurance company to let them on a plan without underwriting.”

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But depending on their age, your kids may be protected by another rule that takes effect for plan years starting after September 23, when insurers can no longer exclude children under age 19 from coverage because of a preexisting condition. This rule applies to new plans and to nongrandfathered plans -- plans that have made significant changes to their premiums and benefits since health-care reform was enacted. But it does not apply to grandfathered plans -- those that have remained essentially the same since health-care reform was enacted on March 23, 2010. Grandfathered plans can still require medical underwriting, even for children under age 19. Ask your insurer whether your plan is considered to be grandfathered.

If you’d like to add a young adult to your policy, check the time frame -- your plan is required to give you written notice of a 30-day period during which you can add eligible children up to age 26 to your policy. And find out how much the insurer charges to cover the child. If the insurer charges an extra premium for each dependent, compare the cost to having your child buy his or her own policy. Healthy twentysomethings can usually buy policies for less than $100 per month in most states.

If your policy is not grandfathered, insurers are also required to provide coverage for certain preventive services without deductibles or co-payments for plan years starting after September 23. See my Health-Care Reform Provisions Kicking In column for details. Policies that are considered to be grandfathered, however, are not required to provide these free benefits.

A few key benefits apply to all individual policies when they are issued or renewed after September 23, regardless of whether they are considered to be grandfathered. Policies are no longer allowed to impose lifetime dollar limits on most benefits. And if you lost your health coverage because you exceeded your policy’s lifetime-coverage limit -- but still qualify for the plan -- your insurer must notify you that you’re eligible to re-enroll in the same plan, says Mast. If the same plan is no longer offered, you may apply to enroll in a new plan with unlimited lifetime coverage. Also, insurers cannot drop you because you get sick; they can only rescind your coverage if you committed fraud or made an intentional misrepresentation to the insurer.

Got a question? Ask Kim at askkim@kiplinger.com.



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