How Many People Are Eligible For Coverage Under Each Plan?

One of the first questions that most people have regarding the differences between individual and family plans is, “How many people are eligible for coverage under each plan?” As you may have guessed from the name, an individual health insurance plan covers one person. If you are single and have no dependents, this is likely your only option. A family plan covers two or more people–typically you, your spouse, and/or your dependents. Under most family plans, “dependents” can mean any of the following:

• Biological Children Under Age 26
• Legally Adopted Children Under Age 26
• Foster Children (In Some Cases)

For health insurance purposes, the standard cutoff for dependents is age 26, however, there are certain exceptions to this rule. For instance, if your biological or legally adopted child is older than 26, but still depends on your support due to a disability, they can be included on most family health insurance plans.

How Your Choice Of Plan Affects Your Premiums

One of the most important things to consider when choosing a health insurance plan is the monthly premiums that you have to pay to keep your policy in effect. If you are an insured through an employer, your employer may pay the premiums for you, but this is rare. What is more likely is that your employer will pay a portion of your monthly premium and you will pay the rest (usually as a deduction from your paycheck). Since these costs can add up, it is important to be fully aware of how much you are expected to pay per month for each plan. Individual health insurance premiums are almost always cheaper than premiums for family plans since only one person is being covered. That being said, covering family members under your family plan will likely be cheaper than covering each of these family members individually.

Another thing to consider when it comes to health insurance premiums is the number of people being covered. Typically, the more people that are included on your family health insurance plan, the higher the monthly premiums will be, though this may only be true up to a certain point. If you have a large family, you may be able to get converge for each family member, while only paying premiums for some of them. This is not a guarantee as different family plans offer different pricing structures.

How Your Choice Of Plan Affects Your Deductible

When choosing a health insurance plan, the deductible is every bit as important a consideration as the premium. A deductible is the amount you are required to pay (out of your own pocket) before your coverage kicks in. Typically, the higher your deductible, the lower your health insurance premiums. As an example, let’s say you have a plan that covers 80% of your hospitalization costs, with a $1,000 deductible. Let’s also say that you have a hospital visit that ends up costing you $11,000. After you pay our deductible of $1,000, your individual health insurance would cover 80% of the remaining $10,000 (meaning that your insurance would cover $8,000 and you would be responsible for the remaining $2,000). One thing to keep in mind is that your deductible is typically a yearly maximum. This means that if the example above occurred in January and you met your deductible, you would not have to pay an additional deductible if you were hospitalized again in June.

All of this leads to some important considerations when it comes to choosing a health insurance plan. With some family health insurance, each individual has their own deductible. Under this type of plan, the deductible you pay for each family member cannot be applied to other members on the plan. As an example, let’s say your child breaks his arm. Treatment for the break ends up costing you the whole thousand-dollar deductible. Since we know these things happen in waves, let’s say your other child breaks her arm a week later. In this case, you would have to pay an additional thousand-dollar deductible. But there is another option: with an “embedded deductible” you have one amount that applies to the entire family. This amount is usually larger than an individual deductible, but less than the sum of each individual deductible, especially if you have a large family. Also, with a large family, you will be more likely to hit this deductible early, since each treatment for each injury or illness will be applied to it.

Out-Of-Pocket Maximums

On a health insurance plan, the out-of-pocket maximum works similar to the deductible. The out-of-pocket maximum is the total amount that you are required to pay out-of-pocket in a given plan year. While the concepts are similar, this should not be confused with the deductible. The deductible is the amount you are required to pay before your coverage kicks in; the out-of-pocket maximum is the amount you are required to pay, period. Going back to our previous example, let’s say you have individual health insurance that pays 80% of your hospitalization costs after you have hit your deductible. Let’s also say that you have recovered from a serious illness that led to $100,000 in medical bills (an amount that sounds high, but is actually quite easy to hit during an extended hospital stay). Your insurance covers 80%, which leaves $20,000 for you to pay. However, if your out-of-pocket maximum is $10,000 for the year, this is all you would pay for approved treatments. The rest of those costs – and any subsequent treatment (e.g. follow-up visits) – that you receive that year would be paid in full.

Of course, this begs the follow-up question, “How does the out-of-pocket maximum work with family plans?” With family health insurance plans, this operates under similar principles as the deductible. With some family plans, each family member has an individual out-of-pocket maximum that they would need to hit before their treatment is covered in full. As with the deductible, some plans offer a total out-of-pocket maximum that the whole family would have to hit. Again, this would be higher than an individual out-of-pocket maximum–let’s say $20,000 instead of $10,000. However, if you have a large family that is going through a particularly rough year healthwise, an embedded out-of-pocket maximum can be a lifesaver.

Additional Considerations

Choosing a health insurance plan for you and your family is one of the most important decisions that you will make. The consequences of this choice can shape your family’s future. That is why you must consider every detail before making the choice. One thing to consider is the cost per person. People are often astounded at how high the premium costs for family health insurance appear, but when you divide these costs by each family member (subscriber) it is often not as high as the premium for an individual plan.

It is also important to figure out the expected medical costs per person under a given health insurance plan. As a helpful exercise, add up the yearly medical expenses from the last coverage year for each family member (or, if you have individual health insurance, add up the numbers for yourself). If you are feeling especially ambitious, look at the numbers from the past few coverage years. Yes, emergencies and unexpected medical issues happen, but looking at your prior medical expenses should give you a rough idea of what you should expect to pay. This will help you determine what kind of plan to buy. For instance, you may decide – after looking at the numbers – that you do not want to pay higher monthly premiums for a low deductible plan if you and your family have never hit that deductible anyway.