Is Individual Health Insurance Cheaper Than Group Coverage?
November 28, 2010 | In: Health Insurance
Image : http://www.flickr.com
After 15 years in the Health insurance field, I can’t tell you how many times I get asked the question, “Why are individual health policies, so much cheaper than a similar group plan?”
Well, the answer is kind of simple. In the state of Florida, a true Small Group insurance policy is a guaranteed issue policy. In short, even if you have multiple chronic conditions such a Heart disease or cancer, the insurance company can not deny you coverage. However, you must meet all the term of a small business, and in order to avoid a Pre-existing clause in the policy, you would have needed to have 12-24 months of prior coverage. It that is the case, then the company not only has to issue to policy, but they also are on the hook for their portion of any claims.
In contrast, in the state of Florida, an individual plan can be underwritten based off of your medical history, height, weight, zip code that you live in, and whether or not you are a smoker. This underwriting ability affords the insurance company the ability to see in advance what type of risk you are to them.
If they like you and you fall within the guidelines of a preferred risk, then you benefit with a much lower premium. However, if you don’t fall within their chosen guidelines, they have many options. First, they can increase the rate of the policy to a point that they feel warrants the risk. Second, they can “rider” out the parts of you body they don’t want to insure. And last, they can just flat out deny coverage.
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