Nongroup coverage plans (also called individual health-care plans) are health insurance plans that insure individuals independently. These plans are often used by people who are self-employed or between jobs; they are also used by people whose companies do not offer group insurance. An advantage of these plans is that they provide a custom insurance policy. There are also several disadvantages to nongroup coverage plans. These plans are expensive—they are usually 15 to 60 percent more expensive than group plans. Nongroup coverage plans may also require subscribers to pass a medical exam prior to enrolling in the program; at a minimum, they require subscribers to submit a personal health history.

Before you sign up for a nongroup coverage plan, check the insurance company’s ratings and its claim service. It is best to avoid a company that raises premiums when claims are made or reserves the right to cancel policies at any time.

Instead of using a nongroup coverage plan when you are between jobs, use COBRA, if possible. COBRA, which stands for the Consolidated Omnibus Reconciliation Act, requires companies with more than twenty employees to continue providing group health-care to former employees, retirees, spouses, and dependents for a specific length of time. This length of time is based on the employee’s reason for leaving the company and is usually about eighteen months. If COBRA is used, the former employer must provide the insurance but the discharged employee must cover the full cost of the health insurance.