Insurance Options: Exploring Different Avenues

There are several ways to obtain insurance, depending on the type of insurance required. For example, health insurance can be obtained through an employer, the federal health insurance marketplace, or directly from a health insurance company. Life insurance, on the other hand, can be purchased directly from an insurer or through a broker. Similarly, auto insurance can be bought directly from an insurance company or through a broker. Additionally, for those who are self-employed or small business owners, insurance can be obtained through a membership organisation or association health plan.

Via an employer

Insurance via an employer

Insurance via an employer is a common way to obtain insurance, with more than half of private sector employees covered by a work-based health insurance plan. This type of insurance is typically offered as part of an employee benefits package and can include health insurance, life insurance, and even disability insurance.

Health Insurance

Employer-sponsored group health insurance is a health plan chosen and primarily paid for by the employer. These plans are often offered to or can include dependents, usually spouses and children. The employer will typically cover most of the cost of the health insurance premiums, with employees also paying a portion, which is taken out of their paycheck on a pre-tax basis, thus lowering their taxable income.

Life Insurance

Employer-provided life insurance is group term life insurance that may be offered as part of an employee benefits package. If available, it is usually an option for all employees. Term life insurance provides a death benefit for the insured's beneficiary and remains in effect only for a specific length of time, often while the employee remains employed by the company. The amount of coverage is typically determined using a multiple of an employee's annual salary or may be linked to their position. Most employers pay most or all of the premiums.

Benefits of Employer-Provided Insurance

• Convenience: Starting coverage is simple, as employees can usually just opt into the plan.
• Savings: Since employers usually pay most or all of the premiums, employees can save money or use it for other needs.
• Acceptance: Most employee life insurance plans are guaranteed, meaning employees will be accepted regardless of serious medical conditions.
• Early Protection: Employee insurance can provide financial security for those who depend on the employee early in their career when funds for personal insurance may be limited.
• Added Coverage: Coverage can usually be increased as life events and needs change, and employers may offer the option to pay an additional premium for increased protection.
• Riders for Extra Protection: Employers may offer riders for certain degrees of illness and disability, providing added protection for employees.

Considerations for Employer-Provided Insurance

• Insufficient Coverage: Basic employer-provided insurance may not meet all your financial needs, especially if you have dependents.
• Loss of Coverage: As with health insurance, gaps in coverage may occur if you change jobs, are laid off, or transition to part-time work.
• More Difficult to Get Coverage with Health Decline: If you leave your job due to a health problem or your health declines, it may be more challenging to get new insurance.
• Spouse Coverage: Employer-provided insurance may not adequately cover an employee's spouse, or at all.
• Cost Increases with Age: The cost of employer-provided insurance tends to increase as employees age.
• Loss of Coverage if Employer Stops Offering: There is a possibility that your employer may stop offering insurance as a benefit, leaving you without coverage.

While insurance via an employer is a convenient and cost-effective way to obtain insurance, it is important to consider the limitations and potential risks. Depending on your circumstances, you may need to supplement employer-provided insurance with additional coverage to ensure adequate protection for yourself and your dependents.

Through the government's health insurance marketplace

The Health Insurance Marketplace is often referred to as the health insurance "exchange". Depending on your income and eligibility for other health coverage, you may qualify for subsidies, also known as premium tax credits, when purchasing health insurance through the marketplace.

The Health Insurance Marketplace is accessible at Healthcare.gov, where you can enter your zip code to be directed to your state's exchange or the federal marketplace. Each state's marketplace has its own set of enrollment instructions. During the annual Open Enrollment Period, you can select a new plan, maintain your current plan, or make changes to your current insurance plan. If you experience a significant life event, such as moving or having a child, you may be eligible for a Special Enrollment Period, which allows you to change your coverage outside of the Open Enrollment Period.

The Affordable Care Act (ACA) established the Health Insurance Marketplace, allowing consumers to compare health plans available in their area. The ACA also introduced premium tax credits and cost-saving subsidies to reduce health insurance costs for those purchasing plans in the marketplace. It is important to note that purchasing a plan outside of the marketplace may result in the loss of these subsidies and credits.

The Health Insurance Marketplace offers a range of benefits, including doctor visits, preventive care, hospitalization, prescriptions, and more. You can compare plans based on price, benefits, quality, and other important features to find the best fit for your needs and budget. Additionally, every health plan in the marketplace provides the same set of essential health benefits, ensuring comprehensive coverage for all enrollees.

To be eligible to enroll in health coverage through the Health Insurance Marketplace, you must meet certain requirements. Firstly, you must live in the United States and be a U.S. citizen or national, or be lawfully present in the country. Furthermore, you cannot be incarcerated in prison or jail. The ACA also provides special patient protections for those insured through the marketplace, such as prohibiting insurers from refusing coverage based on gender or pre-existing conditions.

Directly from an insurer

Buying insurance directly from an insurer is a straightforward process. It involves contacting health insurance companies directly and is one of the most common ways to obtain insurance.

Firstly, it is important to note that the Health Insurance Marketplace does not include every health insurance plan available. Therefore, shopping directly with health insurance companies may allow individuals to find a plan that better meets their coverage needs and budget. When shopping for a policy on a single insurer's website, it is worth visiting several insurers' websites to see all the options available to you.

When buying directly from an insurer, individuals can choose between Affordable Care Act (ACA)-compliant plans and non-ACA-compliant plans. ACA-compliant plans sold outside federal and state exchanges must meet the minimum essential coverage standards of the ACA, such as covering pre-existing conditions, providing essential benefits, and offering preventive care at no extra cost. Non-ACA-compliant plans, on the other hand, may have more exclusions and fewer benefits. An example of a non-ACA-compliant plan is a short-term health insurance plan, which often does not cover pre-existing conditions and may sharply limit vital benefits such as prescription drugs and mental health services.

When purchasing insurance directly from an insurer, individuals can either buy directly from an agent or broker who works for a specific insurer, or they can buy from an independent broker who is not affiliated with any insurer and can offer policies from multiple companies. Affiliated agents typically have more in-depth knowledge of their company's offerings and application processing times, but your options will be limited to the insurers they work for. Independent brokers, on the other hand, can offer a wider range of alternatives and shop around for the best prices.

The application process for buying directly from an insurer usually includes a phone call and a medical exam, but many insurers also offer no-medical-exam life insurance options. The entire application and approval process can take up to four to six weeks on average. During the application, individuals will be asked to provide basic information such as their age, height, weight, and Social Security Number, as well as answer questions about their personal and family health history and lifestyle.

Once the application has been approved, individuals will receive a policy offer. To activate their coverage, they must sign the policy documents and pay their first premium.

Via an online insurance brokerage

When buying through an online brokerage, you will not be eligible for premium tax credits or subsidies. You will also need to be aware of the annual open enrolment window, as you won't be able to buy a policy for the rest of the year unless you have a qualifying life event, such as moving, getting married, or having a child.

Online brokerages can be a good option for those who want to compare plans from different insurers in one place and don't mind missing out on potential subsidies. However, it is important to be aware of the limitations and potential biases of these sites.

Through a membership organisation

Membership organisations are a great way to obtain insurance, especially for those who are self-employed, unemployed, or a freelancer. These organisations allow individuals to band together and negotiate better premiums, similar to an employer-sponsored health plan. This is known as an association health plan.

The first step to obtaining insurance through a membership organisation is to consider the groups you may already be a part of, such as a union, alumni association, or professional organisation. For example, the Freelancers Union, representing 56.7 million independent workers across the US, gives its members the opportunity to receive insurance benefits, including health, dental, and disability cover.

If you are not already a member of an organisation that offers a group health plan, you can search online for "membership organisations" or "membership benefits health insurance" to find one that suits your needs. It is important to explore the benefits offered by these organisations, as well as to factor in the cost of membership when deciding if their health insurance plan is right for you.

Another option is to look into forming an association health plan (AHP). This is where multiple employers, including the self-employed, join together to offer medical benefits. By increasing the number of participants, the association can qualify as a "large group" health plan, which has access to less expensive health plans and can negotiate better rates from healthcare providers and insurers.

It is important to note that not all group health plans offered by membership organisations are approved under the Affordable Care Act, so it is essential to compare them with plans available through the marketplace.

Frequently asked questions