It's a fact of life — you need health insurance — and the time to get it is before you have an accident, suffer a serious illness, or discover you're pregnant. Insurance doesn't cover health care for medical problems or conditions that start before the moment you have your policy. Finding adequate coverage might seem overwhelming, but knowing the basics can help make your search less stressful.

Your boss doesn’t have to provide health insurance

The first reality of health insurance is you do not have a right to it. There are no state or federal laws requiring private employers to offer health benefits to their workers. However, many employers do offer health insurance as a way to attract and keep workers. When group health plans are offered, they are then subject to a variety of state mandates about what benefits must be included, unless the employer is self-insured.

If you lose your employer-sponsored benefits, there is a federal plan called COBRA (Consolidated Omnibus Reconciliation Act) that could provide you with a short-term safety net. For more information, see Know your COBRA rights.

Another federal law that offers some protection to workers experiencing a short-term lapse in their coverage is HIPAA (Health Insurance Portability and Accountability Act). Your rights under this act are explained in The HIPAA law: Your rights to health insurance portability.

Individual health insurance can be costly

If you need to purchase individual health insurance, it can be expensive. Unlike group plans, in which the costs and risks associated with health care are spread among many people, individual health policies are "medically underwritten" to take into account your personal health history. Any "pre-existing" condition such as heart disease, diabetes, and even pregnancy, can nix your chances of acceptance or boost your premiums. Some states require individual health insurers to offer everyone a plan, a mandate known as "guaranteed issue."

The types of health benefits available to individuals are similar to those provided for groups with the main difference being that individual health insurance must be underwritten.

To determine the acceptability of a particular applicant, an underwriter can require information regarding the following:

The individual’s age: Age determines rates, and whether coverage will be issued at all.

The individual’s gender: At younger ages, males have a lower rate of illness and injury than females. The roles reverse by age 60.

The individual’s health history and physical condition: Someone who has had a previous condition that can contribute to a future illness/injury is not considered an ideal risk. In response to a less than ideal medical history, modified coverage may be offered depending on the individual’s health, higher than normal premiums may be required, or the person may be denied coverage altogether.

The individual’s occupation and hobbies: Some occupations such as construction have higher insurance rates, along with people who enjoy dangerous activities such as skydiving or bungee jumping. At times certain occupations are considered so hazardous that insurance companies will not cover them at all.

Expect to pay more and more

Once you have a health plan, don’t expect your premiums to remain the same. Health insurance companies often seek permission to raise premiums. Additionally, some states allow health insurers to "file and use" rate increases, which means the insurers only have to submit their increases in writing and then they may immediately begin charging customers more money. Unless insurance regulators determine the rates are excessive, the insurers are allowed to keep charging the higher premiums.

North Carolina Insurance Commissioner Jim Long says even if you have group health insurance, there’s a good chance your rates will climb. “Even though you have not presented any claims, others that are insured by the same type policy have presented claims. Rates are directly affected by the claims experience of the group insured under a given plan or policy,” Long explains.

Help when you can't afford an individual plan

If you're a college student and you need coverage — perhaps you're being dropped from your parents' plan — your school might offer reasonable health insurance. See Health plans for college students for more information.

No matter what your age, there are several federally sponsored programs to help you if can't afford the premiums for individual health insurance, providing you meet their eligibility guidelines.

• Medicare, a health insurance program for people age 65 or older, certain younger people with disabilities, and people with end-stage renal disease.

• Medicaid, a program for the poorest individuals and low-income families with children.

• The State Children's Health Insurance Program (SCHIP), a plan that provides health care to children whose parents make too much to qualify for Medicaid, but earn too little to afford individual health insurance.

Many states offer SCHIP plans for children of parents who don’t have health insurance through work and cannot afford individual plans. Some states have expanded the plans to cover the parents as well. More information is available from the U.S. Department of Health and Human Services.

New York Governor George Pataki, like many of his fellow governors, is urging low-income parents to sign up for these programs. “This landmark health insurance program for working adults with lower incomes will help ensure that hundreds of thousands of families get the high-quality health care they need to build a happy and healthy future,” Pataki says.

Making sense of alphabet soup

Before you visit a country where the population speaks a foreign language, it helps to know a few key words and phrases. The same holds true when you're trying to decipher the lingo of health insurance. Whether you're buying individual or group health insurance, know there are several health plan varieties, including traditional indemnity fee-for-service plans (FFS), health maintenance organizations (HMOs), point of service plans (POS), and preferred provider organizations (PPO).

Each plan has its own features to consider before making your choice.  HMOs, PPOs, and POS plans fall under the umbrella of managed care plans, which emphasize cost-effective medical care for individuals and their family members. These managed care plans may be owned or arranged by insurance companies, employers, or established independently to help individuals and families finance medical treatment.

FFS, also called traditional indemnity

FFS coverage offers flexibility in exchange for higher out-of-pocket expenses, more paperwork, and higher premiums.

FFS advantages

• You may choose your own doctors and hospitals.

• You may visit any specialist without getting permission from a primary care physician.

FFS disadvantages

• There's typically a deductible (anywhere from $500 to $1,500) before the insurance company starts paying claims, and then doctors are reimbursed about 80 percent of the bill while you pick up the remaining 20 percent.

• You might have to pay up front for medical services, and then submit the bill for reimbursement.

• FFS plans pay only for "reasonable and customary" medical expenses. If your doctor charges more than the average for your area, you will have to pay the difference.

HMO

HMOs are the least expensive, but also the least flexible of all the health insurance plans. They are geared more toward members of a group seeking health insurance. A major objective of an HMO is to reduce medical care expenses by increasing the use of preventive health services. HMOs are designed to maintain the individual’s health as well as provide adequate medical care when an illness or injury occurs.

HMO advantages

• They offer their customers low co-payments, minimal paperwork, and coverage for many preventive-care and health-improvement programs.

• Participants pay a small fee (or a co-payment) for each visit to a physician in their network.

• Basic health service with an HMO typically includes physician services, outpatient services, medical treatment, short-term mental health services, and outpatient/inpatient emergency room visits.

HMO disadvantages

• You must choose a primary care physician, also known as a PCP.

• HMOs require you to see only network doctors, or they won't pay.

• You must get a referral from your PCP to see a specialist.

POS

POS plans are more flexible than HMOs, but they also require you to select a primary care physician (PCP). A POS plan combines the care aspect of an HMO with the freedom of choice aspects of traditional medical expense insurance.

The POS plan arranges a network of health-care providers who will treat plan participants for a small fee or co-payment but at the time of an illness or injury, the individual may choose to visit a doctor outside of the network who is not preferred. The plan participant then seeks reimbursement from the POS plan.

POS advantages

• Depending on your insurance company's rules, you may choose to visit a doctor outside the network and still receive coverage — but the amount covered will be substantially less than if you go to a physician within your network.

• These plans tend to offer more preventive care and well-being services, such as workshops on smoking cessation and discounts to health clubs.

POS disadvantages

• You must choose a PCP.

• While you may choose to see a physician outside the network, if you don't receive permission from your PCP, you're likely to wind up submitting the bills yourself and receiving only a nominal reimbursement — if any.

PPO

PPOs give policyholders a financial incentive — reasonable co-payments (also called co-pays) — to stay within the group's network of practitioners.

PPO advantages

• The standard co-payment is $10 for a routine office visit during regular hours.

• You may go to any specialist without permission, as long as the doctor participates in the network.

PPO disadvantages

• If you see an out-of-network doctor, you might have to pay the entire bill yourself and then submit it for reimbursement.

• You might have to pay a deductible if you choose to go outside the network, or pay the difference between what network doctors and out-of-network doctors charge.

How to find an individual health plan

Your first step in getting health coverage is to contact an insurance agent in your area, or an insurance company. An agent should be familiar with the insurance companies that do business in your state, especially those able to provide the coverage you need.

You might do business with either a "captive" agent who works for one insurance company, or an independent agent or broker who sells policies for a variety of companies. A list of agents can be found in your phone book or by contacting your state department of insurance.

You should discuss with your agent your own particular health insurance needs. Think carefully about what coverage you must have. Do you need health insurance for your whole family, or just yourself? Do you want to choose your providers? If you're over 65, do you need insurance to fill the gaps in Medicare? Do you need — and can you afford — long-term disability and/or long term care coverage?

When you've found the right coverage, you need to fill out an application or give information to your agent to complete the necessary forms. Be honest. It's important to disclose your medical history thoroughly and accurately. Report all of your health problems to your agent. If any of your health information is misstated or incomplete, the company might refuse to pay your claims and could cancel your policy.