It’s possible to buy health insurance without an employer-sponsored policy, and many people do. For the 2022 plan year, more than 13.8 million Americans enrolled in individual health insurance through the Health Insurance Marketplace.
People may choose to buy their own health insurance for various reasons. Some may not have access to an employer-sponsored health plan, while others may not be satisfied with their employer’s options. Others may be self-employed, retired, or unemployed.
Whatever your reason for buying individual health insurance, the process can be overwhelming. The average Marketplace shopper can choose from over 100 plan options. To narrow your options to only the plans that would best suit your needs, consider your budget, expected healthcare needs, and current doctors.
Table of Contents
Do You Have to Have Health Insurance?
Whether health insurance is mandatory depends on where you live. Though there is no longer a federal mandate requiring Americans to buy health insurance, some states still require residents to purchase a health plan. Those who live in these states face a tax penalty if they do not have qualifying health coverage, similar to the initial Affordable Care Act (ACA) mandate that required all Americans to purchase minimum essential health coverage.
As of 2022, these states are:
Why Buy Health Insurance On Your Own?
Buying health insurance on your own could make sense in various situations. These are some common reasons why people need to buy individual health insurance.
You Are Self-employed
Employees may have the option to get health insurance through their employers, but self-employed individuals are responsible for providing their own insurance. The number of employees your business has could affect how you buy health insurance on your own.
Self-employed workers with no employees, such as contractors, consultants, and freelancers, can apply for private health insurance as individuals. For some people, getting coverage through a spouse’s employer-sponsored group health plan could also be an option.
Small business owners can use the Small Business Health Options Program (SHOP) Marketplace to get coverage for themselves and their staff. While it’s not mandatory to offer health insurance if you have fewer than 50 full-time or full-time equivalent employees, small businesses may be eligible for tax credits that help cover the cost of their employees’ health insurance premiums.
You Are Not Eligible for Employer-sponsored Health Insurance, or Your Employer Does Not Offer It
Part-time employees and those whose employers don’t offer health coverage can buy health insurance independently. Some may also be eligible to join their spouse’s group health plan.
As of March 2021, employer-sponsored health insurance coverage was available to 71% of private sector employees. However, not all employers are required to offer health insurance coverage to their employees, and some employees are not eligible for their employers’ group plans.
Small businesses with fewer than 50 full-time and full-time equivalent employees are not legally required to offer health insurance benefits. In addition, businesses that choose to offer health insurance plans are not required to offer them to employees who work an average of fewer than 30 hours a week.
You Want Additional Health Coverage
Some people who have employer-sponsored health coverage may need additional coverage. You might want to buy a secondary plan if your employer-sponsored plan does not fully meet your needs.
Secondary health insurance plans could help supplement your existing coverage. Some types of private plans you can buy on your own include:
- Dental plans: These plans help cover the cost of preventive care and basic dental treatments.
- Vision plans: These plans offer coverage for eye exams, glasses, and other vision services.
- Accident plans: These supplemental plans may help cover some injury costs.
- Hospital indemnity plans: These are plans that provide a daily payment to help cover hospitalization costs.
You may also be eligible to get additional health coverage through your spouse’s employer-sponsored plan. You may be added to a spouse’s employer plan and then add your spouse to your own employer plan. This dual coverage may help cover services or costs not covered by your primary health insurance plan.
You Lost Your Existing Coverage
People who lose employer-sponsored coverage could be eligible for COBRA continuation coverage. This program helps employees and their families temporarily maintain their employer-offered plans, even if they are divorcing and had health coverage through their spouse’s job. COBRA could also apply when an employer has gone out of business, or a health insurance company discontinues a plan.
Under COBRA, you may be responsible for the entire group rate premium, including the portion your employer used to cover. Buying individual health insurance through the Marketplace or a health insurance agent could be a more budget-friendly option.
You Are Between Jobs
If you’re currently looking for health insurance between jobs, an individual health insurance plan could help you pay for healthcare needs during your job search. Some job seekers could be eligible for subsidies that make Marketplace coverage more affordable, depending on their unemployment compensation.
Other options may be available. Depending on their income and household size, unemployed people may be eligible for low-cost health coverage through their state’s Medicaid program. Married job seekers could be eligible to join their spouse’s employer-sponsored group health plan.
You Want To Change Plans And/or Insurers
If you are unsatisfied with your current health plan or insurance company, you may decide to shop for individual health insurance to explore other options. However, you may need to wait to switch plans because you may only change health insurance plans during pre-determined enrollment periods.
The Marketplace Open Enrollment Period runs from Nov. 1 to Jan. 15 each year in most states, though some states have different dates. You may now join a new health insurance plan or make changes to your current one, such as adding or dropping people from coverage.
If you have experienced a major life event, such as starting a new job or moving to a new state, you may be eligible for a Special Enrollment Period, which would allow you to enroll in a health plan outside of the Open Enrollment Period window.
You Are Retiring
Employer-sponsored health coverage generally ends when an employee retires. A 2021 survey found that only 27% of large companies extend health benefits to retirees. Retirees who need to replace their job-based plan may buy individual health insurance through the Marketplace.
However, other options may be available to retirees, including:
- Medicare, a program for people 65 and older or younger than 65 with specific disabilities
- COBRA continuation coverage, which lets eligible people temporarily maintain their former employer’s health plan
- Spousal coverage for retirees who can get insurance through a spouse or partner’s employer
How to Get Private Health Insurance
If you’re interested in private health insurance, you can work with a licensed health insurance agent to find a plan that meets your needs. You may also shop for coverage through the Health Insurance Marketplace. No matter which option you choose, consider the benefits you need, your healthcare budget, and your preferred healthcare providers before making a plan selection.
What is the Health Insurance Marketplace?
The Health Insurance Marketplace is a federal government resource where individuals in most states can shop for health insurance. Some states, including California, New York, and Pennsylvania, run their own Marketplaces.
Federal and state-based marketplaces allow shoppers to browse health insurance plans available in their area and apply for coverage. To make it easier for shoppers to compare options, Marketplace plans are grouped into metal tiers. These tiers are based on the plan’s cost-sharing requirements, not its quality:
- Bronze: Low premiums paired with high deductibles and coinsurance
- Silver: Moderate premiums and moderate cost-sharing requirements
- Gold: High premiums with low deductibles and coinsurance
- Platinum: Higher premiums in exchange for low cost-sharing
- Catastrophic: Low premiums and very high deductibles
What Does ACA Compliance Mean?
The Affordable Care Act (ACA) established certain rights and protections for people buying individual health insurance. Plans that adhere to these rules are known as ACA-compliant.
ACA-compliant health insurance plans, like those purchased through the Marketplace, are required to cover your pre-existing health conditions without charging more. They’re also required to offer coverage for the following 10 essential health benefits without a yearly or lifetime dollar limit:
- Outpatient hospital care
- Emergency services
- Hospitalizations
- Maternity care and newborn care
- Mental health services
- Prescription drugs
- Rehabilitation services
- Laboratory services
- Preventive services
- Pediatric services
Health plans that are not required to be ACA-compliant include short-term plans and healthcare-sharing ministries, as well as grandfathered plans that were sold before the ACA took effect.
What Benefits Do You Need?
Health insurance can help pay for ongoing health needs like prescription drugs. Without insurance, commonly prescribed drugs may put a dent in your budget. For example, the epinephrine auto-injectors used by people with severe allergies may cost more than $600, while a 30-day supply of birth control pills typically costs between $22 and $79.
Consider your current medications and other ongoing health needs when evaluating plans. For example, those with recurring doctor’s appointments and prescriptions may need a plan with more extensive benefits than those who do not take any medications and rarely see a doctor.
However, regardless of your current health status, unexpected health events can bring unexpected medical bills. Something as simple as repairing a broken leg could cost $7,500, while being hospitalized for just three days could cost around $30,000. Factor in room for emergencies when you evaluate your plan options.
Individual health insurance plans in the Marketplace are also required to cover certain in-network preventive care benefits at no cost. These benefits include routine immunizations, screening tests, and health and wellness counseling. Regular preventive care could help you cut healthcare costs because health problems may be more easily treated when caught early.
What Is Your Budget for Individual Health Insurance?
To find a health insurance plan that fits your budget, keep the following cost components in mind as you compare plans.
- Premiums: This is your monthly insurance payment. In 2022, the Marketplace average benchmark premium was $438. Remember that individual health insurance costs more than employer-sponsored group plans because an employer does not subsidize Marketplace plans.
- Deductibles: This is the amount you pay out of pocket before your plan begins covering costs. For example, a $4,000 deductible means you’re responsible for the first $4,000 in covered services before your health insurance begins sharing in costs.
- Copays: These are fixed amounts you pay for covered health services. For example, a plan might charge $35 for each doctor’s visit.
- Coinsurance: This represents the percentage of covered health costs you pay after you exhaust your deductible. For example, a plan might charge a 40% coinsurance for X-rays, meaning you would pay for 40% of the cost and your insurer will pay the remaining 60%.
- Out-of-pocket (OOP) maximum: This is an annual cap on what you spend on covered services. In the Marketplace in 2022, plans can set OOP limits of up to $8,700 for individuals and $17,400 for families.
- Out-of-network costs: These are additional costs for getting care outside your plan’s network. Some plans charge higher copays and coinsurance if you go out of network, while others do not cover out-of-network care.
Are You Eligible for Health Insurance Savings Through Subsidies?
Some Marketplace shoppers may be eligible for subsidies that lower the cost of individual health insurance. You can find out if you’re eligible when you apply for coverage through the Marketplace. Subsidies include:
What Is the Best Health Insurance Network for You?
A health insurance plan’s network is the list of healthcare providers and facilities that have agreed to contract with the insurer. Networks are essential because they may affect which doctors, pharmacies, and hospitals you use and how much you pay for your care. The two most common network types are:
- Health Maintenance Organizations (HMOs): In 2022, 46% of Marketplace plans were HMOs. These plans generally limit coverage to in-network providers, except in emergencies.
- Preferred Provider Organizations (PPOs): These plans typically cover both in-network and out-of-network care, which makes them popular with people who want more flexibility in their healthcare providers. However, seeing an in-network or preferred provider would cost significantly less than seeking out-of-network care.
Make Your Selection and Enroll
When you’re ready to start shopping for individual health insurance, visit the Marketplace or talk to a licensed health insurance agent for assistance. Remember that unless you are eligible for a Special Enrollment Period, you may need to wait for the annual Open Enrollment Period — however, there that period is currently active, running from November 1, 2022 to January 15, 2023. However, you may begin your research and get a health insurance quote any time of the year. Coverage changes made during the Open Enrollment Period take effect on January 1st of the following year if you enroll before December 15.