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Buying Your Own Health Care
CNBC.com | September 12, 2011 | 10:34 AM EDT

With so many Americans working as consultants or freelancers because of the bad economy, more people are paying for their own health care. There is plenty to consider when shopping for coverage, especially with the changes mandated by the Affordable Care Act of 2010.

A few years ago, Lisa Tsou, equipped with a law degree from Columbia University and an economics degree from Stanford University, became frustrated wading through information for a family member’s health-care insurance that she didn’t find straightforward or helpful.

Out of that was born MyHealthCafe.com —a watchdog site she calls “non-partisan and practical.” It provides articles, glossaries, and forums to help consumers understand health insurance, federal and state health-care programs, and prescription drug programs.

“It’s a big economic issue,” says Tsou. “How many bankruptcies involve medical bills? Most cases, and they typically have health insurance.”

In fact, according to a national study conducted by The American Journal of Medicine in 2007 and released in 2009 , 62.1 percent of all bankruptcy filings in 2007 were medical related. In most cases, the debtors were well-educated, middle-class people, who owned homes and had health insurance. And that was before the major economic downturn.

The most frequent question Tsou is asked comes from self-employed people or those soon-to-be self-employed who don’t know where to begin securing health insurance.

“I tell them it’s based on what they need, what their circumstances are, and where they live,” says Tsou.

That could mean one person needs comprehensive prescription coverage, while another needs none or minimal coverage, or one needs a plan for a family of four, while individual coverage would suffice for another. There could be a pre-existing condition or not. Geography also plays a part in options and rates.

Young and Healthy

For those who have enjoyed mostly good health, the private health-insurance market is full of options. You can go through a broker or deal directly with an insurance company. More plans now encourage preventative care and, because of the Affordable Care Act, many are eliminating co-pays for “wellness” visits.

Comparison-shopping websites such as eHealthInsurance.com are an easy way to compare and contrast plans. Endorsed by Suze Orman on its home page as the “largest online resource for health insurance,” eHealthInsurance.com takes the user through a simple series of steps before presenting the most viable options based on the criteria entered.

By typing in a New Jersey zip code, for example, a user can immediately see that one's options are Horizon Blue Cross Blue Shield of New Jersey , Oxford Health Plans and AmeriHealth New Jersey . From there, inputting simple information, such as date of birth and gender, leads to plan options ranging in price and scope.

Another way to go is through a group plan set up for a specific occupation. For instance, freelancers could opt for the Freelancers Union or Mediabistro.com , both of which have simple set-ups to determine plan choices.

Seniors and Those With Pre-Existing Conditions

Tsou calls health-care coverage for higher risk people, such as the elderly and those with pre-existing conditions , “a whole other ball of wax.” She recommends a group or specialty policy if one is available in the area.

Another option is the high-risk insurance pool which, depending on where a person lives, is state- or federal- based and designed to be relatively affordable.

In order to be eligible for a pool, the candidate must be uninsured for six months. The Pre-Existing Condition Insurance Plan (PCIP) site explains its parameters more fully, noting that it is not based on income, nor is there a higher premium because of a person’s medical condition.

“The PCIP is a bridge program [as part of the Affordable Care Act],” Tsou says. “It’s supposed to go away in 2014.”

The Geography Piece

Location comes into play in all the health-insurance scenarios laid out above and can significantly impact a person’s monthly budget. Much like auto insurance, the state where one resides makes a difference because of risk and cost-of-living factors.

Depending on a person's state and health condition, premiums can vary greatly, according to PCIP.gov . In North Carolina, for instance, the range for individuals is listed at $69 to $548 per month, while in New York monthly rates are $362 to $421.

“When people tell me they’re moving, I tell them to look into health insurance for that area,” says Tsou. “Especially now, as people are picking up their lives and moving for job opportunities. Some are used to getting health insurance through employers. They're experiencing sticker shock.”

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