How to Find the Right Private Health Insurance

If you no longer have employer-sponsored coverage, you'll find the marketplace for medical insurance awfully daunting. Here are some tips

by Pallavi Gogoi

If the rocky economy has cost you your job, chances are pretty good that you have joined the 46 million Americans who don't have health-care insurance coverage. Welcome to the complex world of private medical insurance.

All you have to do is type in your age and Zip Code at an insurance site like ehealthinsurance.com and you will be presented with a blizzard of options. But your age, health, and income will narrow that down quickly, with monthly premiums ranging from $100 to $1,000. Navigating through all this can give anyone a headache. But getting it right is important. This could be one of the most significant decisions you make.

The first thing to keep in mind is: There is a reason why 46 million Americans don't have coverage. Private health insurance is expensive, and coverage is limited. A premium of $100 a month may be less than what you were paying for the health insurance your former employer provided, but the policy it buys will exclude coverage for a myriad of health problems. And you will have to pay a deductible of at least $2,000 before your benefits kick in. To top it off, there will be an upper limit in terms of how much the insurance company will cover.

"In the private world, coverage is less secure and very skimpy," notes Karen Pollitz, research professor at the Health Policy Institute at Georgetown University in Washington.

Preexisting Troubles

If you have a preexisting health condition, such as diabetes or cancer, the complexities rise significantly. Insurance benefits from an employer are more often than not comprehensive, providing coverage for regular doctor visits, emergency care, prescription drug plans, and maternity, as well as preexisting conditions. But get into the private insurance arena, and if you have heart disease, asthma, or even AIDS, the odds that you will be denied coverage rise sharply.

The good news? If you do have a preexisting condition and you've just lost your job—and the company you worked for had at least 20 employees—you will qualify for COBRA. That will give you 18 more months of coverage. But you will most likely get sticker shock when you see the premiums, because you will have to foot the entire amount of the monthly premiums. And often, the larger portion of your premium was being paid by your employer.

A lot depends on where you live. Some states, such as New York and Massachusetts, prohibit discrimination against people with a preexisting health condition. Residents of Massachusetts cannot be turned down for health insurance coverage no matter what illness or diseases they might have. Some Web sites can help you find that information—for instance, the American Diabetes Assn. has a map on its site, and if you click on your state, you see information on what's offered there. And the Florida Health Dept. has a program to help people with AIDS or who are HIV-positive get treatment.

Or, you may qualify to buy health insurance as part of a professional association or union. For example, the Freelancers Union has musicians, graphic artists, and writers who qualify as members to buy health coverage at a lower group rate. The Henry J. Kaiser Family Foundation has a wealth of research on the topic, and it's a good idea to read the group's latest report for information and also to get tips when making a decision.

The "Gap Insurance" Option

If you are what insurance companies term "young and invincible"—that is, under the age of 30 with no health problems—it should be cheaper to shop for an individual policy.