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Small Business Employee Benefits and HR Blog

Where and When to Purchase Individual Health Insurance

For those purchasing individual health insurance for the first time, the transition Where and When to Purchase Individual Health Insurancemay seem daunting. Fortunately, the process is not too complicated. This guide provides helpful information on where and when to buy individual health insurance as well as information on factors that could influence a person’s decision to buy a Marketplace or non-Marketplace plan.

Where to Purchase Individual Health Insurance

A handful of options exist for those seeking to buy individual health insurance. First, plans are available through the Affordable Care Act (ACA) Marketplaces online. A number of states and the District of Columbia have their own Marketplace websites; for those residing in the remaining states, applications for an individual plan can be made through HealthCare.gov.

The second option is to purchase a plan directly from an insurance company. An individual may contact any health insurance company and inquire about plans that are available in the area. HealthCare.gov has a plan finder to help individuals find private coverage outside of the Marketplace.

Third, individual healthcare insurance can be purchased through a broker or agent. While a broker will sell plans from a variety of health insurance companies, an agent typically works on behalf of just one company. A person does not need to pay extra fees to use the services of an agent or broker, and either one can assist by comparing plans and processing the enrollment.

Finally, one could also purchase individual health insurance from online sellers, such as HealthSherpa. These sites can help with plan comparisons and enrollment with the insurance company.

When to Purchase Individual Health Insurance

Insurance that qualifies for the minimum essential coverage under the ACA cannot be purchased year-round. Instead, one can only buy individual health insurance during an open enrollment period or if there is a qualifying life event or change in employment. Because all private insurers have adopted the ACA’s open enrollment period, this limitation applies regardless of whether the individual insurance is purchased on or off Marketplace. The open enrollment period for this year ended on January 31, 2016, and open enrollment for 2017 will run from November 1, 2016 through January 31, 2017.

Special enrollment periods apply in certain situations. For example, Native Americans are permitted to enroll at any time, as are persons who qualify for Medicaid. An individual may also qualify for a special enrollment period if he or she has experienced a qualifying event such as marriage, divorce, a change in citizenship status, or a change in the number of dependents.

If open enrollment has passed, short-term plans can be found outside of the Marketplace. However, these will not count as minimum essential coverage under the ACA, and the fee for being uninsured must still be paid.

Differences Between Marketplace and Off-Marketplace Plans

First, all qualified Marketplace and off-Marketplace plans cover the same basic benefits, count as minimum essential coverage, and offer identical rights and consumer protections. The chief differences between Marketplace and non-Marketplace individual plans lie in the cost and in the benefits offered above the minimum requirements.

Only Marketplace individual health insurance plans offer cost assistance through tax credits, subsidies, Medicaid, or the Children’s Health Insurance Program (CHIP), so getting an individual insurance plan from the Marketplace is generally the best choice if a person qualifies for assistance. Even if an individual is only eligible for a small amount of cost assistance, a Marketplace plan typically remains preferable because any given unsubsidized plan is still more costly than the most expensive subsidized plan.

If a person’s income is above $46,680 annually, it makes sense to shop around on and off of the Marketplace. This is because the cost of insurance includes more than just the monthly premium (for example – copayments, deductibles, etc.), and if an individual intends to use a lot of healthcare services in the upcoming year, it's wise to shop around for the best terms and conditions. Shopping outside the Marketplace will also provide a wider variety of plans. No agent or broker will have access to every plan available in each region, so those who wish to shop around will need to reach out to various sources to get a thorough view of the options.

Conclusion

Purchasing individual health insurance does not have to be complicated – one only needs to begin the process of enrollment by going online or contacting an agent or broker. The choice to purchase a plan on the Marketplace mostly depends upon whether a person qualifies for cost assistance. If one can receive even a small subsidy, it will usually be more financially beneficial to buy a plan on the Marketplace.

What questions do you have about purchasing individual health insurance? Leave a comment below!

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