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Health Insurance
Health Insurance
Getting your money's worth!
What
you need to know about Health Insurance
1.
Insurance costs a lot but having none costs more.
There are sensible ways to save money on insurance, but skipping
coverage isn't one of them. Medical bills from even a minor car
accident can deplete your savings. A major illness can push you into
bankruptcy!
2. If your employer offers insurance, grab it.
Group coverage, particularly when it's employer-subsidized, is almost
always a better deal than anything you can get on your own, even if
you're young and healthy. If you're NOT young and healthy, it's
definitely a better deal.
3. Comparing plans is tough but important.
Unfortunately, there is no such thing as standard coverage. Benefits
and costs vary widely from plan to plan. If you have choices, you'll
have to examine each one closely to find the best deal.
4. The lowest premium isn't always the cheapest plan.
What your insurance covers is just as important as, and sometimes more
important than, what you pay up front. Ultimately, the cheapest plan is
the one with the best price for the benefits you're most likely to use.
5. Even good coverage can have loopholes you need to look for!
You can count on your health insurance to cover you for a hospital
stay. Most policies cover doctor visits, but benefits for mental
health, prescription drugs and dental care are strictly optional.
6. You'll pay more for freedom.
Plans with the most comprehensive coverage at the lowest out-of-pocket
cost require you to use a specified network of hospitals, doctors, labs
and other providers. The more flexibility you demand, the more you'll
pay, in either premiums or co-payments.
7. You can check out networks before signing up.
A growing number of public and private sources compile information on
the track records of individual doctors, hospitals and health plans.
8. You can keep your insurance if you lose your job.
State and federal regulations protect you from losing your health
coverage just because you lose your job. Unfortunately, they offer
little protection from high premium costs.
9. Working couples have more to think about.
If you and your spouse both get health insurance at work, you must sort
out whether it makes more sense to have two policies or keep the better
of the two. If you have kids, you need to decide who's going to cover
them.
10. Look for tax breaks, they can help!
Ordinarily medical expenses, including insurance premiums, are not tax
deductible until they exceed 7.5% of your income. However, if you're
self-employed or your employer offers a flexible spending account, you
can get a tax break without meeting the threshold.
The
Health Plans
There are two types of plans:
There
are two basic types of insurance: indemnity plans and managed care. In
general, indemnity insurance, also called "fee-for-service" gives you
greater freedom and flexibility than managed care. However, you'll pay
more out of pocket for the health care you get. With indemnity
coverage, you can choose any doctor, hospital, laboratory or other
medical provider. As long as your insurance contract includes the
service performed, insurance will cover it. However, it won't pay the
entire charge. You'll have to satisfy an annual deductible, generally a
few hundred dollars, before insurance even kicks in. Then, you'll owe a
portion of each bill, called a co-payment, normally 20%. If the
provider you choose charges unusually high fees, your share may be
considerably higher. That's because your insurer will base its 80%
share on the "usual and customary" fee for the service in your area,
not on the actual bill. As a rule, indemnity insurance covers only
illness or accidents; it doesn't pay for preventive care such as flu
shots or birth control. Depending on your policy, it may or may not pay
for prescription drugs or psychotherapy.
HMO's
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Managed care turns indemnity coverage 180 degrees. With a health
maintenance organization (HMO), there are no deductibles. Co-payments
are fixed and low, generally $15 or less. Preventive care, such as
drugs and mental health treatment are usually covered. However, you can
choose which doctors, hospitals and other providers who have contracts
with your HMO, and you can receive only medical services authorized by
the plan. |
If you use
non-authorized providers or receive non-authorized care, your HMO
will not pay any portion of the bills.
Because many people are uncomfortable with these restrictions, managed
care has evolved to include hybrid plans that blend HMOs with some of
the features of indemnity coverage. With a point-of-service plan (POS),
for instance, you can keep your costs low by using a network of doctors
and hospitals that have contracts with your insurer. However, if you
choose, you can go outside the network, but you'll pay a deductible and
higher co-payments.
The only way to know for certain what your options and costs are, is to
carefully read the descriptive materials and question anything that's
not clear. For general help in understanding health insurance, check
the federal Agency for Health
Care Policy and Research or the American
Association of Health Plans. Your state insurance department may
also offer online help.
Once
you have a handle on the basics, you will be ready to make an informed
choice.
Saving
Money on your Health Care plans
If
you are young and healthy, saving on health-insurance premiums is tough
enough. Older people not in the best of health will have great
difficulty finding an affordable plan.
When buying your own insurance, you've got to shop around for the best
price. As long as you're healthy and under 50, insurers want your
business. To avoid attracting applicants they don't want, though, many
keep a low profile, so you'll have to seek them out by phoning agents,
checking with your state insurance department or going online. For
example, try Quotesmith, a
nationwide insurance broker, has a national online database of carriers
you can search for policies that might be available to you.
Older people or those with health problems will have a tougher time
finding insurance. Government protections offer some help but insurers
are not always quick to advise you of your options, so you may have to
take the initiative to get the coverage you're entitled to.
Make the most of spousal coverage. Working couples with insurance from
two employers may be able to get more or pay less than one-income
couples. Depending on the premiums and benefits of each available plan,
the best deal may be separate coverage for each, double coverage for
both, or forgoing one spouse's coverage in favor of the others. If you
have kids, you'll need to compare your options for family coverage. Be
warned: The calculations can be mind-boggling and, even with double
coverage, a couple can't collect more than 100% on the same claim.
Use available tax-breaks. If you're self-employed, you may be able to
deduct 45% of your insurance premium from your gross income. If your
employer offers a flexible spending account, sign up. You can pay your
premium as well as expenses not covered by insurance with money that's
not subject to income tax or Social Security taxes.
If you are generally healthy and use few medical services, you can cut
premium costs substantially by buying "catastrophic" coverage. This is
an indemnity policy with a very high deductible, perhaps as much as
$2,500. Assuming this much financial risk can slash your premium by 50%
or more, depending on your age. Don't try to trim your premium by
reducing coverage on the other end, though. Make sure your insurance
has a high maximum pay out, at least $100,000, preferably $500,000.
Look for a subsidy. If your income is very low, if you're permanently
disabled or if your medical expenses are extremely high, you may
qualify for federal or state-subsidized insurance, such as Medicare or
Medicaid (check your state Medicaid office). Regardless of your ability
to pay, you may be qualified to receive free primary care through
public health clinics. To find a site near you, check www.bphc.hrsa.dhhs.gov.
If you lose your job or have health problems, federal and state laws
give you certain rights to health insurance, which are covered by
C.O.R.B.A.
The consumer’s legal rights to Health Care
If
you work for a company with 20 or more employees and you lose your job,
a federal law called COBRA (for Consolidated Omnibus Budget
Reconciliation Act) requires your ex-employer to let you stay on the
group policy for at least 18 months, at your own expense. If you have
generous coverage paid mostly by your employer, the full premium (plus
2% for administrative costs) could be quite a shock. Still, it's wise
to hang on to your old coverage until you're covered at a new job or
find more affordable insurance elsewhere.
A more recent federal law called the Health Insurance Portability and
Affordability Act (HIPAA) goes COBRA one better. It says that as long
as you've been covered under a group policy within the previous 63
days, no insurer can turn you down for coverage, even if you're
seriously ill. Unfortunately, HIPAA doesn't regulate premium costs so
there's no guarantee that you can afford the insurance you're legally
entitled to.
As the number of uninsured continues to rise, states have become
increasingly active in helping individuals get insurance, though price
continues to be a problem. Twenty-two states have so-called "high-risk
pools," which guarantee insurance to applicants whose health histories
make them undesirable to insurers. Some states have other ways of
making coverage more accessible. For a state-by-state analysis of your
rights to health insurance, check the Website run by Georgetown
University's Institute
for Health Care Research and Policy.
Health Insurance
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