How to buy health insurance on your own

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Most Americans get health insurance through their employer or Medicare. However, you can buy health insurance on your own.

The Affordable Care Act (ACA) created exchanges that allow people to compare individual plans in their area. You can see each plan’s design and what you would pay in premiums and out-of-pocket costs. There are also individual insurance plans outside of the exchanges that offer even more choices.

Buying your own health insurance can seem daunting, but it can also open up more possibilities. Let’s take a look at how to get your own health insurance.

What health plans can you buy on your own?

You can get individual health insurance and most people can get short-term health plans. Another option for people under 30 or who are facing specific hardships are catastrophic health plans.

You can purchase an individual plan on the ACA exchanges or even outside of the exchanges. Insurers offer plans both on the exchanges and off the exchanges.

The ACA exchanges provide subsidies for people with incomes under 400% of the federal poverty level, which reduce premiums and health plan costs. A single-person household would need to make about $51,000 or less and around $105,000 for a family of four to qualify for those cost-reducing subsidies.

Another option in most states is short-term health plans. Short-term plans offer low premiums, but fewer benefits than a regular health plan and potentially substantial out-of-pocket costs. You can have a short-term health plan for a year and renew twice, so you’re able to keep those plans for up to three years in most states.

The downside of short-term plans is that you won’t find many benefits that are found in an individual plan. You’ll likely have trouble finding a short-term plan that covers mental health, prescription drugs and maternity care.

Also, California, Hawaii, Massachusetts, New Jersey and New York don’t allow short-term plans and other states restrict the length of those plans.

A third option is catastrophic health insurance. These plans are offered through the ACA exchanges. Only people under 30 and those facing specific hardships, such as homelessness, are eligible for catastrophic health insurance. These plans have low premiums, but high deductibles and out-of-pocket costs. Unlike short-term plans, catastrophic health insurance has comprehensive benefits similar to what you’d find in an ACA plan.

Where to shop for health insurance on your own

Your first step when you’re shopping for a plan on your own is to check the ACA exchanges. Most states go through the federal exchanges. A handful of states have their own exchanges and may have different rules and open enrollment than the rest of the country.

Whether your state has its own exchanges or not, you can start at the federal site and choose your state. If your state isn’t part of the federal exchanges, you’ll be taken to your state site.

Once in the right place, you’ll enter your information, including your family size and household income. With that data, the site will provide estimates of costs for each plan that includes subsidies.

You can also search for individual insurance outside of the exchanges. Shopping for an individual plan outside of the exchanges is more difficult. You don’t have a federal or state government site to offer side-by-side comparisons — and you don’t qualify for subsidies. You’ll also need to check out the health plans in your area individually.

However, you have more plan options when you look for a plan outside of the exchanges.

If you’re buying off the exchanges, you can start by checking out some of the largest health insurers in the U.S.: UnitedHealthcare, Anthem, Aetna, Cigna and Humana. Other options include regional health plans, such as Blues plans, as well as other insurers like Centene and Molina Healthcare.

When choosing a health plan, check the company’s reputation and financial standing. You can do this through a Google search. See what customers say about them. Check their financial standing, such as the A.M. Best Financial Strength Ratings. Insure.com’s Best Health Insurance Companies is a great place to get that information.

Health insurance without phone calls

Online health insurance quote tools let you compare health insurance companies and costs for individual health plans. Shopping for health insurance requires you to be truthful. Otherwise, you could wind up not benefiting from the best rates.

To get accurate quotes, you’ll have to provide personal information, including your ZIP code, phone number, your household income and your family size. You must provide accurate income and family size information — especially if you’re looking for an ACA plan. ACA plan members are eligible for subsidies, but you need to enter the right information in order for the tool to provide accurate quotes that takes into account subsidies.

You could provide an incorrect phone number to avoid getting potential phone calls. However, you’ll likely have to provide an accurate number in order to complete choosing a plan.

Pros and cons of buying health insurance on your own

There are positives and negatives to getting your own health insurance. Going through an employer usually means lower rates, especially if you don’t qualify for subsidies. However, that comes with fewer choices.

Here’s a look at the pluses and minuses or shopping for health insurance on your own:

Pros

You have more health plan options. People who get a plan through an employer can only choose between the ones selected by the company. When you buy on your own, you’ll likely have multiple options (possibly dozens) in the ACA exchanges and individual market.
You may find a plan that better fits your needs. Employers have reduced options as they’ve sough ways to cut health care costs. That could mean limiting employees only to a high-deductible health plan (HDHP) or a health maintenance organization (HMO). In the individual marketplace, you can compare more plans to find one that works best for you.
People who qualify for subsidies can save. The ACA offers subsidies to reduce health care costs for people whose income falls below 400% of the federal poverty level. If you qualify for subsidies, the exchanges automatically estimate the costs of premiums with the reduction.
You can buy a catastrophic or short-term health plan. Catastrophic and short-term health plans are low-cost plans. These plans can be an option for young, healthy people who don’t have regular prescription drugs or doctor visits. Remember that catastrophic plans offer comprehensive benefits, which aren’t usually found in short-term plans.

Cons

More work for you. Searching for an individual plan takes research and narrowing down your choices. The ACA exchanges make it easier, but it’s still more time-consuming than an employer narrowing the selections for you.
Individual plans can be costly. People who don’t qualify for income-based subsidies can pay much more for an individual plan than someone with an employer-based plan. eHealth said the lowest premium plan in the exchanges (Bronze) costs an average $448 for single coverage and $1,041 monthly without subsidies. The average single Platinum plan, which has the highest premiums but lowest out-of-pocket costs in the ACA exchanges, costs $732 monthly without subsidies and $1,610 for a family plan. Meanwhile, the average premiums for a single employer-based plan are about $100 monthly. So, the cheapest ACA plan on average costs four times the average employer-based plan costs, if you don’t qualify for subsidies.
An employer doesn’t help you pay for health care. One reason why individual insurance is more expensive than employer-sponsored insurance is that businesses usually pay more than half of the health insurance costs. Kaiser Family Foundation said family coverage premiums costs are more than $20,000 on average annually in the employer-sponsored market. However, employers paid more than $14,500 of those premiums with employees picking up the rest.
Less likely to find a PPO. PPOs are the most common type of health plan offered in the employer-sponsored market. PPOs offer members to get care in-network and out-of-network and doesn’t require members to get referrals from primary care providers. Kaiser Family Foundation estimated that nearly half of employer-based plans are PPOs. Those types of plans aren’t nearly as standard in the individual market. eHealth said that only 16% of individual plans are PPOs. Instead, more than half of individual plans are HMOs, which offer restricted provider networks and require members to get primary care provider referrals to see specialists. If you want a PPO, you may not be able to find one in the individual market.

Buying health insurance on your own can be more complicated. However, by shopping around and comparing multiple individual health plans, you may be able to find a plan that fits your needs and doesn’t hurt your wallet.

Les Masterson

Contributor

Les, a former managing editor, insurance, at QuinStreet, has more than 20 years of experience in journalism. In his career, he has covered everything from health insurance to presidential politics.