“What is individual health insurance?” If you’re not already familiar with the concept, this is likely a question you’ve thought to yourself within the past year or two. Individual health insurance has been around since 2010 with the signing of the Affordable Care Act (ACA). It was then made more popular thanks to several reforms to the ACA in 2014. In this blog post, I’ll break down the elusive answer to this question and explain how this insurance staple has been flipping the traditional, one-size-fits-all approach to health benefits on its head for nearly a decade!
What is individual health insurance?
It’s actually a pretty simple definition: it is health insurance coverage that a person purchases on their own.
This is different from what most of us are familiar with: traditional group health insurance (also referred to as employer-sponsored health insurance). If you’ve ever worked for a company that offered its employees coverage rates for one type of health plan, you’ve experienced traditional group insurance.
Individual health insurance is also separate from government-sponsored programs like Medicaid and Medicare.
Who can have individual health insurance?
A quick clarification is needed: Individual health insurance gets its name because it refers to an individual plan. While these plans can be great options for eligible single people, they also are available to eligible families and households! So when you think “individual plans,” think of these as health insurance plans made to cover an individual person OR an individual household.
The types of people or households that commonly need to purchase individual plans are:
- those who do not have access to a traditional group plan through an employer, and/or
- those who do not qualify for government-sponsored programs like Medicaid and Medicare.
I’ll talk more about who is eligible for individual health insurance in my next blog.
Where can I purchase individual health insurance?
Individual plans can be purchased through the Marketplace (also known as the “exchange”). The Marketplace, shorthand for the “Health Insurance Marketplace®,” is a shopping and enrollment service for medical insurance.
Numerous health insurance companies list their compliant health plans on the Marketplace for individuals and families to submit applications toward and purchase coverage. In most states, the Marketplace is housed at healthcare.gov.
The Affordable Care Act (ACA), a piece of healthcare legislation, created the Marketplace in 2010.
What are the alternatives to individual health insurance?
We’ve already discussed the main alternative to individual plans: traditional group (employer-sponsored) plans. However, in addition to these methods, there are a few additional alternate options for coverage! These are government-sponsored programs, short-term plans, and sharing programs.
Medicaid and Medicare are government-sponsored healthcare programs that are based on eligibility.
- Medicaid covers eligible families, children, and individuals. Eligibility is based on household size and annual income.
- Medicare coverage is available to individuals age 65 or older. Some individuals may qualify for Medicare before age 65 if they have a disability or certain illness.
Short-term health insurance plans are just that—health insurance plans that typically only offer coverage for anywhere from 3 to 12 months. These types of plans are advantageous for healthy individuals or families who, for one reason or another, find themselves in a period of time where there is a gap in coverage. This could be because they are between jobs, are awaiting eligibility for a government-sponsored program, or will soon switch insurance plans and are waiting for their new plan to become active.
Lastly, sharing programs—or medical cost-sharing programs—are programs in which large groups of people pool their money together to pay their medical bills. These are also sometimes called “healthcare ministries” as they are run by nonprofit or religious organizations and not insurance companies. While sharing programs are not technically health insurance, they typically operate and feel very similar to insurance plans.
How common is individual health insurance?
As I mentioned before, the popularity of individual plans has grown significantly in the past decade. Proprietary Remodel Health research found that a whopping 60% of individuals choose Marketplace plans when given the opportunity. And the trend lines continue to rise!
If you’re curious to learn more about individual health insurance or if you could have access to an individual plan, check back in on my next blog. I’ll answer the question “who is eligible for individual health insurance?” Thanks for taking the time to learn with me today!
Important Notice: Remodel Health does not intend to provide specific insurance, legal, or tax advice. Remodel Health always recommends consulting with your own professional representation to properly evaluate the information presented and its appropriate application to your particular situation.