Disadvantages of Putting Your Family on a Private Health Plan

Lengthy Application Process

In all but a few states, individual health insurance is medically underwritten. This means that the insurance company will ask for the medical history for every family member to be included on the health plan for which you are applying. You will need to answer a series of health questions that apply to all family members. If any family member has any of the many conditions listed, the insurance company will want all of the details. When was the last office visit? Who was the doctor? What were the results of the last visit? Are follow-up visits required? To provide complete and accurate medical information for all family members could involve timely research.

Once the application is submitted, the insurance company may take a couple of weeks before they reply with a decision. The approval can be further delayed if the insurance company decides that they want medical records from the family doctor for any family member listed on the application. Medical records are often required if insufficient information is provided on the application or there is a concern about the accuracy and honesty of that information. Your signature on the application also acts as authorization for allowing the insurance companies to obtain and review your health history. If medical records are requested for any family member, you can assist in expediting the processing time by contacting your physician and explaining the urgency. Most doctors' offices are very busy places and they may not place a priority on a request from an insurance company for medical records. Your phone call asking for prompt attention is likely to considerably reduce the processing time.

Not Guaranteed Issue

With the exception of a few states, individual health insurance is not guaranteed issue. New York, New Jersey and Massachusetts are the guaranteed issue states in which this situation is not applicable and all individuals and families can get health insurance without medical underwriting. Other states are considering similar legislation in an attempt to reduce the number of uninsured residents. In those states that do not have guaranteed issue laws, the insurance companies selling individual health insurance can be selective about who they insure. On a family health insurance application, they can reject any family member based on health history, current health status and health risks due to obesity and smoking. If the insurance company declines any family member, they must provide the applicant with the reason for the decline. If medical records are requested, the approval process could easily be delayed 3 or more weeks. If all family members are healthy, and the application is complete, the approval could take only a couple of days. Family health insurance policies usually become effective on the first day of the month, following that date that the application was submitted.

Unexpected Rate Increases

Anybody that has had an individual health insurance policy is well aware of the unpredictability of rate increases. Although the insurance companies avoiding raising premiums for existing members whenever possible, it is often necessary for them to do so in order to maintain a profit and remain in business. Increases in prescription drug costs, health care costs and changes in state regulations are common causes of rate increases. These things all increase the operating and claims costs to the insurance companies, which are passed on to the plan members through periodic increases to your monthly premiums. This is an unavoidable occurrence that should be expected and estimated into your family budget. On average, family health insurance rates increase about 15% per year.

No COBRA or HIPAA Benefits

Individual family health plans do not meet COBRA or HIPAA requirements and can't be extended if you lose coverage. Keep in mind that individual health insurance is permanent issue and you can only lose coverage if you fail to pay your premium or commit fraud by lying on your application.

Note: The information and advice provided in this Guide to Family Health Insurance may not provide the best advice for every situation. The best options for your family's medical insurance may be unique and require the advice of a local advisor. We highly recommend that you consult with more than one insurance broker in your state to gather and compare alternative opinions. The owners of HealthInsuranceFinders.com are not responsible for any decisions you make in regards to your family's health insurance through the information provided in this guide.