Health Insurance Explained: Individual vs. Family Plans
Health coverage can be obtained from an employer, association or health insurance marketplace. Depending on the circumstance, a person can apply for either an individual or family plan. Both have certain requirements based on age, family size and in some cases, income. When shopping for coverage, it’s important to understand the differences between the two.
Choosing an Individual or Family Plan
Since each plan has its own attributes, it’s critical to note changes in cost, accessibility and range of service. Whether it’s for an individual or group, the goal is to find the best fit for one’s health care needs.
- How does coverage work? An individual health plan covers one person, whereas a family plan covers two or more people, such as a spouse or children under the age of 26. This includes naturally born, legally adopted and foster kids in certain circumstances. Children over the age of 26 with a disability are also eligible for coverage under a family plan.
- How does family size affect premiums? Adding a spouse or a child to a health plan makes the monthly payment – or premium – go up based on the number of people covered. Yet, there is an exception for those with more members. If three or more children under the age of 21 are on one plan, the subscriber will only pay premiums for the three oldest.
- Is there a difference in deductibles? When calculating a deductible, family plans usually cost twice as much as the individual. The same applies to the out-of-pocket maximum, which is the most a person must pay during a policy period.
- What are the Medicaid and Medicare restrictions? Medicaid provides health coverage to low-income adults, children, pregnant women, seniors and those with disabilities. Medicare is available to older adults (age 65 and up), and some younger people with disabilities. Yet, Medicare is only available to individuals, while Medicaid is open to both individuals and families.
- When do subsidies apply? Individuals and families paying for their insurance without the assistance of an employer or association may be eligible for a government subsidy. It can be applied to a monthly premium to ensure coverage for those unable to afford higher payments. Subsidy requirements are based on one’s income and how it compares to the Federal Poverty Level, as well as family size and local health insurance costs.
Open enrollment for 2020 health coverage began Friday, Nov. 1 and ends Sunday, Dec. 15, 2019. There’s also a special enrollment period available throughout the year. Qualification depends on the occurrence of major life events, including childbirth, changes in eligibility, change in residency, death of a plan member, loss of a job or loss of coverage through a family member. This is imperative for all to remember, especially those interested in adjusting or switching their current health care plan.
About the Author: Rick Notter is the vice president of individual business at Blue Cross Blue Shield of Michigan.
If you found this post helpful, you might also want to read:
- 2020 Open Enrollment Guide
- Lower Individual Enrollment Rates for 2020
- What Happens If I Miss the Open Enrollment Deadline?
Photo credit: Courtneyk