How Do You Get Individual Plans Similar to Employer Plans?

[NCAgent]

Hey guys,

So I was looking at the individual plans offered online from Aetna, Cigna, BCBS, Metlife, VSP, and the like and these plans don't have nearly the same limits as plans offered through employers.

For example, none of the plans I see cover occlusal guards for dental. VSP through my old employer provided more coverage with transition lenses and low index frames. Nor to almost any of the plans provide any kind of mental health coverage besides Value Options, which is only provided for employers.

So how do I get these plans for individuals? I'm interested in one for myself but I know others who could use it as well. I'm sure some of the places like Caremark, Value options, and the like provide nicer coverage but only for businesses. Are there no real equivalents for individual plans?

I'm in NC if that helps... Thanks for the advice! I'm P&C so L&H are still new to me.

 

[taterpeeler]

simple... you dont.... indy policies cost less than group and the benefits refelect such

 

[NCAgent]

So that means in order for me to get similar coverages I need to have my own business and get group coverage for myself and the employees? I get that the overall cost is associated with that I should just pay out of pocket; I really get it.

But there are some people I know who have dependents (2 children) that could benefit from those...benefits of the higher policies. Otherwise they are going to pay more out of pocket for the things that are not covered and still pay month to month for insurance.

The same goes for prescription drug plans. A lot of companies say 10-15 per generic for group. Going to individual, there are a lot higher stipulations for that such as many generics are closer to 30 dollars and whatnot.

Case in point- venlafaxine, something a friend of mine can use. 150mg daily is about 40-60 dollars for 30 days, which is more than copays for many brand name meds. Adderall XR's generic is the same way.

 

[arnguy]

IMHO Peeler stated it very succinctly. Couldn't have said it better myself.

 

[Ann H]

Group plans have richer benefits and more privileges (such as guaranteed issue for newly hired employees & credits against the pre-ex waiting period if you had prior creditable coverage.) Group plans even have maternity coverage. I'm not an expert any state except AZ, but I believe those Federal laws apply everywhere for group plans.

Although the premium for a group plan is often higher than a similar individual/family plan, the employer often pays a chunk of the premium, leaving the employee to pay just a portion (and that's often done with pre-tax dollars through a POP.) So, often group plans have good participation of the healthy & young, along with the older and sick. That makes a good risk pool.

So, why aren't similar rich benefits offered on an individual/family plan? The answer is adverse selection. A family who wants a lot of dental & vision care buys the richest dental & vision plan. The next family may not need those rich benefits, and therefore doesn't purchase the higher-benefit insurance. Adverse selection. It's impossible to price benefits when you are facing almost 100% adverse selection, so the insurance companies simply don't offer it. In the case of group insurance, there is a pool of people, some of whom may have high utilization, counterbalanced by some who may not.

 

[NCAgent]

Group plans have richer benefits and more privileges (such as guaranteed issue for newly hired employees & credits against the pre-ex waiting period if you had prior creditable coverage.) Group plans even have maternity coverage. I'm not an expert any state except AZ, but I believe those Federal laws apply everywhere for group plans.

Although the premium for a group plan is often higher than a similar individual/family plan, the employer often pays a chunk of the premium, leaving the employee to pay just a portion (and that's often done with pre-tax dollars through a POP.) So, often group plans have good participation of the healthy & young, along with the older and sick. That makes a good risk pool.

So, why aren't similar rich benefits offered on an individual/family plan? The answer is adverse selection. A family who wants a lot of dental & vision care buys the richest dental & vision plan. The next family may not need those rich benefits, and therefore doesn't purchase the higher-benefit insurance. Adverse selection. It's impossible to price benefits when you are facing almost 100% adverse selection, so the insurance companies simply don't offer it. In the case of group insurance, there is a pool of people, some of whom may have high utilization, counterbalanced by some who may not.

Ann, this is great for an explanation, thank you very much. This was exactly what I was looking for.

Do you typically see certain benefits only offered to larger groups as well? For example, if I have a business with 3-4 other employees and myself, would I have access to the same benefits that a larger (20-30 employee) business would get? I'm not concerned about price differences, just benefit differences.

Thanks for your help!

 

[Ann H]

Ann, this is great for an explanation, thank you very much. This was exactly what I was looking for.

Do you typically see certain benefits only offered to larger groups as well? For example, if I have a business with 3-4 other employees and myself, would I have access to the same benefits that a larger (20-30 employee) business would get? I'm not concerned about price differences, just benefit differences.

Thanks for your help!

In AZ where I live, a small group can get the same MEDICAL benefits as a group of 20-30 employees. The real difference in benefit plans comes at 50+ employees.

However, that is not true of ancillary benefits like dental, vision, or disability. Usually plan benefits differ for groups of 5-9 employees, 10-25, and 25+. Often groups of 2-4 employees cannot qualify for these benefits, or can only qualify for benefits that are limited.

 

[Dave020]

I can only speak for California, but there are two issues which affect the differentiation between group health plans and individual plans:

1. State benefit mandates are heavier on employer plans than on individual coverage plans

2. PARTICIPATION requirements - call it a mandate. If 75% of all eligible individuals and families were required to participate in the individual market, adverse selection would be reduced and richer plans could be offered. In CA, groups require 75% of all eligible employees to participate in the plan (eligible employees are those without a valid waiver of coverage).

Currently in California the individual market looks like this (roughly):

2.1MM covered under private health plans
8.3MM (6MM constant) not covered under anything.

That is a 20% (at best 30%) participation rate in the open market. No employer plan could operate (nor be allowed to operate) with that low a participation rate.

 

[Ann H]

Currently in California the individual market looks like this (roughly):

2.1MM covered under private health plans
8.3MM (6MM constant) not covered under anything.

That is a 20% (at best 30%) participation rate in the open market. No employer plan could operate (nor be allowed to operate) with that low a participation rate.

Thank-you, Dave, for sharing that. That was very insightful, and it is useful information in explaining why the individual market is squeezed.

 

[stiffy]

Insurance is for the unexpected. If you try to "cover" things that you know you will need, (dental, vision) you're not going to win.

Insurance companies make money selling group dental and group vision because they know that many of the employees covered by it won't use it. On the other hand, they know than any individual who buys dental or vision is going to use it - so the way they're priced and with waiting periods, you're going to pay more for it than what you get.