Note: This article assumes that:
a) You and your family members do not have a health insurance from your current employer,
b) You and your family members are not covered by any government health insurance plans, and
c) You are looking to buy a health insurance policy for your family members but are confused between going for an individual health policy for each member of your family and a single family policy that covers all members of your family.
If you are have a family and want a health insurance plan for everyone in the family you have two choices. Either go for individual health insurance plan for each member of the family, or buy a family health insurance plan which will cover every member of your family.
Now how do you decide which one to buy?
In this article we will help you to decide between an individual or family health insurance plans.
An individual policy means you will have to buy separate plans for each member of the family. You can decide upon the plan value for each member separately. Say for younger people in the family who don’t fall sick quite often – the coverage can be less, and for the older people you can opt for a higher coverage as the chances of their falling sick is more.
However the negative side of an individual health insurance plan is that you pay for each member of the family and therefore its costly. On the other hand if two or more people in the family fall sick, you will still have enough coverage to make sure to pay bills of the hospital easily through their separate plans.
Family health insurance plan is a single plan that covers all member in the family. Needless to say, family health insurance plans are cheaper than 5-6 individual plans (assuming if there are 5 or 6 members in the family).
On the negative side, if two or more family members fall sick simultaneously, you may not find enough coverage to pay medical bills for all sick people through a single family health insurance plan.
However its not recommended that you buy a family health insurance plan. Why?
Ok. Lets take an example.
Mr. Steve buys a family health insurance plan which covers medical bills up to USD $25,000 ($25k), and unfortunately one member of the family falls sick in the first month of the policy and uses up $24,000 in hospital bills. You get the point. Now Mr. Steve is a worried man. He is left with only $1000 in his policy and almost a year is left for the medical policy to end. In panic Mr. Steve buys another family health policy. This killed the only benefit of a family policy – that they are cheaper than individual policy.
Another situation can be if two or more people in the family fall sick and finish a good portion of the insurance. In both the cases Mr. Steve is left with less coverage for the family members for almost a year.
There is another disadvantage with the family plan. That is most health insurance companies will not renew the policy if any one member of the family reaches the maximum permissible age for a health policy. In that case the family will have to discard the current policy and buy another policy or go for individual policy. Discarding a health policy is not a good idea as most companies give some benefits of renewing a policy. When you stop a policy you lose all benefits.
When one of your children reaches adult age, the health insurance companies will not renew the policy and you will have to stop the policy.
Its advisable to buy a family health insurance plan only when every member of your family already has an individual plan and you think its inadequate and you want to enhance the medical coverage of the family. It does not make sense to buy two individual plans for the same member of the family. It will be very costly. Instead if you want to increase coverage buy a family insurance plan.
Also we recommend you to read American Health Insurance Portability and Accountability Act (HIPAA) allows you to a lot of flexibility, benefits and security of your health related issues.
We recommend that you also read the following:
1) American Health Insurance Portability and Accountability Act (HIPAA) – WikiPedia
2) Health Insurance Portability Accountability Act.- American Medical Association (AMA)