If you're just entering the world of individual medical coverage for the first time, brace yourself. You'll need to make many more decisions than you would under an employer-paid plan. But don't panic --- an experienced health insurance agent can guide you through the process to help you obtain the coverage you need.

Whatever the reason you lack health insurance, whether because you've recently completed college, lost your job or started your own company; buying individual coverage for the first time can be a daunting experience. Here are some of the most important things you'll need to know.

1. THE STATE OF YOUR HEALTH INFLUENCES THE OUTCOME OF YOUR INSURANCE APPLICATION.

HIPAA, the Health Insurance Portability and Accountability Act of 1996, requires insurers to write even the smallest of employer group plans on a "guaranteed issue" basis. This means that the insurer must accept any small employer group that applies for coverage, regardless of the group members' health status or claims history. All employees have to do is enroll when they first become eligible, or during the plan's annual open enrollment period. Unfortunately, individual insurance works differently. When you apply for individual coverage, the insurer underwrites you based on your individual health conditions, if any. If you have any pre-existing health conditions, your insurer can exclude coverage for it, charge extra or even refuse to issue a policy. So don't necessarily be wowed by a low price you see in a quote unless you have a clean health history. Low prices are usually preferred rates. Standard and smokers rates can be much higher. One more thing, an experienced agent can review your health conditions and let you know in advance what the likely outcome will be, thus saving you a lot of time and disappointment.

2. YOU'RE TIMING IS IMPORTANT.

If your existing group coverage (whether COBRA or a student health plan) ends soon, you will want to apply for new coverage within 63 days. Why 63 days? HIPAA allows an individual who has group coverage to obtain new coverage with a reduced, or no, exclusion period for pre-existing conditions. This HIPAA protection applies only to insurance applicants who have had continuous "creditable coverage" with no gaps greater than 63 days. HIPAA will allow you to obtain new group coverage, an individual "conversion" policy from the same insurer that provided your group coverage, or a special "group to individual portability" policy available in every state.

3. YOU'RE FLEXIBILITY MATTERS.

Are you willing to switch your health care providers if needed? Then you might be able to save some money with a preferred provider organization (PPO plan), which provides higher benefits and usually lower copayments when you use an in-network provider.

4. YOU'RE ABILITY TO BUDGET IS IMPORTANT.

Are you one of those people who spend every cent they make? Or can you budget and set money aside? The individual who doesn't like to budget will likely feel more comfortable with a "rich" plan that involves little out-of pocket expense. You'll want to look for a plan that offers low copayments for routine office visits and prescriptions. Of course, there is a tradeoff, you'll pay more for this type of health plan. Budget-conscious individuals and families can pay less for their health insurance (and enjoy additional tax benefits) with a high-deductible health plan linked to a health savings account. The high-deductible plan (HDHP) will protect you from catastrophic health care costs, provide some preventive care benefits, and cost a lot less than a "rich" health plan. With the HDHP, you can then put aside money in an HSA (in 2009, up to $3,000 for self-only coverage; $5,950 for family coverage) to pay health care costs not covered by the HDHP.

5. THE HDHP/HSA OPTION OFFERS THE FOLLOWING ADVANTAGES:

? You can claim a tax deduction for contributions you (or someone other than your employer) makes to your HSA, even if you do not itemize deductions on Form 1040.

? Contributions remain in your account until you use them.

? Interest or other earnings on your account balance accumulates tax-free.

? Distributions you take from the account to pay qualified medical expenses are tax-free.

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