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How to apply for individual insurance

Written by: Elizabeth Walker
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Published on November 14, 2022.

To save on healthcare costs, more employers are adopting reimbursement models like health reimbursement arrangements (HRAs) for their employees’ health benefit, empowering employees to choose their own individual health plan and get reimbursed, tax-free, for their premiums.

While the freedom to choose your own policy is great for your healthcare, it can be daunting to shop for your own insurance plan if you’ve never done it before. While there are several ways to go about shopping for individual health insurance, the most common way is through the Health Insurance Marketplace.

In this article, we’ll walk you through the five-step process of applying for individual health insurance, so you can choose the right plan for you and your family.

Read more about how HRAs can help you in our complete guide

What is individual health insurance?

Individual health insurance, or self-insured coverage, is a health plan individuals purchase for themselves and their families. These plans work differently than traditional group health plans, which are selected and sponsored by an individual’s employer.

Individuals often purchase these policies through an insurance agent or broker, so they have help understanding and navigating insurers, plan options, and premium costs.

However, since the ACA was passed, many American shop or their own individual health insruance with help of the online Health Insurance Marketplaces, which include the federal Marketplace and state-based exchanges.

With the creation of the Affordable Care Act (ACA), insurers can no longer deny health insurance for individuals with preexisting medical conditions, and premium tax credits are available to those who qualify, depending on income limits.

Additionally, all health plans purchased on the Marketplace are considered qualified health plans, which means they cover the ten essential health benefits.

Now that we’ve defined what individual health insurance it, let’s cover the steps you would follow if shopping for your own individual policy.

Step 1: Go to healthcare.gov or your state's individual Health Insurance Marketplace website

After the ACA was passed, the online Health Insurance Marketplaces, both the federal Marketplace and state-based exchanges, were created to help Americans sign up for their own individual health insurance.

To start shopping for a health plan, you’ll need to see if your state has its own health insurance exchange. You can check on our state-by-state guide. If your state does not have its own exchange, you’ll use the federal exchange at healthcare.gov

Usually, you’ll only be able to sign up for a health plan during the open enrollment period at the end of the year. However, if your current employer just offered you a reimbursement plan, like an HRA, then you qualify for a special enrollment period that allows you to shop for a plan outside the regular enrollment period.

Step 2: Complete the online application

Whether you’re applying for a policy for the first time or renewing your current health insurance plan, the Marketplace website will walk you through several questions via online forms to help determine your age, financial status, and location.

You can expect to provide the following information during the application process:

  • Date of birth
  • Social security number
  • Contact information, such as your mailing address, zip code, email address, and mobile phone number
  • Tax filing status*
  • Number of dependents*
  • Current job and household income information*
    • You must also provide the social security number of anyone helping you pay for the policy to determine household income eligibility, even if they aren’t directly applying for the health coverage.
  • Other income information such as pensions, rental income, received alimony, unemployment benefits, disability benefits, etc.*
  • Current insurance information, if applicable, such as how you are insured (employer coverage, Medicaid, individual health insurance, etc.)*
  • Payment information, such as a credit card or bank draft (ACH) information

*These questions are only asked if you apply for federal financial assistance (i.e., premium tax credits, cost-sharing, Medicaid, CHIP, etc).

Aside from your tobacco use, there won’t be any questions about your medical history. As stated above, the ACA has mandated that no one will ever be charged more for insurance because of their health, so there’s no need to worry about having any medical records on hand.

Overall, completing the form should take between 15–30 minutes, and email updates will be sent to you as your application is processed.

Step 3: Choose a plan

Once you’ve filled out your application, you’re ready to choose a plan. The website will display all the available plan options within four metallic tiers: bronze, silver, gold, and platinum.

A bronze plan will generally cost the least monthly, but you'll pay more out-of-pocket when you receive medical care. This could be a good option if you don't plan on needing a lot of medical services, but want coverage if you’re in an accident.

Conversely, a platinum plan will generally have the highest monthly premium costs, but you'll pay the least when you receive medical services. This could be a good option if you have a lot of medical needs or visit your doctor often.

It’s important to note that these metal tiers have nothing to do with the quality of care you’ll receive. They simply determine how you and your insurance company will split your healthcare costs.

If you’re worried about choosing a plan on your own, healthcare.gov has a number you can call to talk with a professional for free. If your organization administers your HRA with PeopleKeep, you can get even more help with Stride Health.

Stride Health is an online tool you can use to get a personalized health insurance policy recommendation. You can search for the lowest-priced policies in your area and learn if you qualify for premium tax subsidies, making your search through affordable health insurance options quick and easy.

Step 4: Pay your first premium

All health plans are “guaranteed-issue,” which means all eligible individuals are accepted no matter what, so you won’t need to wait and see if your plan is accepted or not.

Once you’ve selected a plan, you’ll need to make your first payment before your coverage officially starts. In most cases, you’ll be transferred from the Marketplace to your insurance company’s website to enter your credit card information for your first payment. Or, the Marketplace will bill you for your premium and forward the payment to your insurance carrier.

Once purchased, you’ll receive an insurance card and documents by mail. Even if you leave your current job, your plan will stay with you since it’s not tied to your employment, like a group health insurance plan.

Step 5: Submit your premium for reimbursement

This last step is optional, but essential if your employer offers an HRA. If you have an HRA allowance from your employer, you’ll likely be able to get a tax-free reimbursement on your health insurance premiums, as well as other qualifying medical expenses, such as prescription drug costs and certain medical equipment.

All you need to do is submit documentation to your employer that shows the following:

  • The premium amount
  • The coverage date
  • The insurance provider

After your employer reviews and approves the documentation, you’ll automatically get reimbursed every month up to your allowance amount. If your premium exceeds your monthly allowance, you’ll simply pay what’s left out of pocket.

Conclusion

Through the Health Insurance Marketplace, it’s easier than ever to find an affordable plan that meets your unique healthcare needs. There’s no right or wrong answer when choosing comprehensive health coverage, but working with a licensed broker can help you during your search and get you enrolled in the right plan for you and your family situation.

Even better, if your employer is offering you an HRA, you can use your allowance to pay for your monthly premium and other healthcare expenses, making your individual health insurance policy even more affordable than you may think.

This article was originally published on July 8, 2021. It was last updated on November 14, 2022.

Originally published on November 14, 2022. Last updated November 14, 2022.
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