Buying health insurance on your own should be your absolute last resort. Compared with group plans, individual insurance is often more expensive overall and might have less generous benefits. In most states you can be denied coverage or charged more if you have a pre-existing health condition.
Moreover, the hard-sell marketing tactics used by many insurers make it all too easy for consumers to end up with Swiss-cheese policies that won't come close to covering their health-care expenses if they fall seriously ill.
The most dangerous pitfall is buying health insurance with "affordable" premiums without investigating what it actually covers. Given that American health care is the world's most expensive, the only way for the insurer to make individual premiums affordable is to cut back on benefits. That can be accomplished in one of two ways: by increasing deductibles and co-pays (it's not uncommon to find policies with $5,000 or $10,000 deductibles) or by limiting benefits. Some individual polices don't cover doctor visits or prescription drugs, for instance.
Other policies might seem to cover everything, but they do so only up to a certain, often inadequate, limit. We've seen policies that cap outpatient care at $2,000 per year or pay only $900 per day in hospital expenses. When heart bypass surgery costs $45,000 and outpatient cancer chemotherapies can cost as much as $14,000 per treatment, such policies are guaranteed to leave you with crushing medical debts for normal treatments if you face a serious illness. You can identify those policies because they are usually labeled "limited benefit" or "not major medical" policies.
If you have no choice but buying health insurance in the individual market, look for the most comprehensive plan you can afford. If you must choose between high deductibles and limited benefits, go for the high deductibles. Unfortunately, many people with limited incomes have no truly affordable choice in this market.
Never buy a nonrenewable policy
Most commercial individual policies are guaranteed renewable, meaning that even if you become ill and require expensive treatment, you can still renew the policy every year (though your premium will almost certainly go up) as long as you pay your premiums on time. Nonrenewable policies are just that—you have no right to renew them. If you get seriously ill, the insurer can cancel the policy at the end of your contract term.
