The Basics of Health Insurance
There are many types of health insurance plans out there and available to Individuals, Families, Small groups, Associations, Mom and Pop stores and Large companies. Most if not all plans are expensive.
The big query is how does the average person know which plan to capture for their specific individual needs?
How many different health insurance plans are there? Well, I can tell you that there are a whole lot of different ones out there. It’s not the fact that there are alot of different ones out there, but that there are alot of different types of plans out there.
to give you an idea of how many different types of plans there are, here are a few of them.
There is the PPO, HMO, POS, FSA, HSA, High deductible 100%, High deductible 80%. In the dental arena we have the DHMO, DPPO, DPOS, the discount cards for dental, vision, and prescriptions, which also provide some type of benefit for chiropractic visits and legal services as well.
We also have the Hospital Indemnity plans, which are designed for persons who have been turned down for medical insurance due to pre-existing conditions, some are reliable and some are terrible plans.
Then and let’s not forget our seniors also have a very hard time trying to decipher what is available to them. Medicare is a great program, but our seniors have to figure out if they are just going to stick with medicare and medicare alone, or are they going to get a Medigap or Medicare supplemental idea, or are they going to go with a Medicare Advantage plan that combines the medical and prescription benefits together, or a separate drug conception, and if they decide to go with a Medicare Advantage Conception, are they going to get one that covers the drug coverage gap? are they getting an HMO? POS? PPO?
All these questions? so where do you get the answers?
Most of us, know that if we ask a insurance agent, they will in fact try to sell us a plan, normally it will be a plan from a carrier that they are contracted with. Is that right or wrong? Well if you ask an Insurance agent, it’s logical that they will sell you a plan. Will they compare rates for you against other carriers, most will.
Will they tell you if their competition is cheaper? some will, some won’t. Is it right?
I am going to go over the different plan types and will try to keeep it as simple as possible.
To keep it as simple as possible i am going to give a definition of each plan and interpret the terminology within the terminology, because we all know that with any concept, there are maximum out of pocket charges, or as i like to call them (out of pocket Surprises), co-insurance, deductibles, co-pays and other such terms which can confuse even the smartest person.
So let’s acquire started, and remember i am keeping it simple, this is just an overview of the different plans, i will get into each plan more thoroughly through future postings.
Traditional Major MEDICAL PLANS- In a major medical plan the insured (you) is responsible for paying a deductible before the insurance plan pays any benefits. Then the insurance company pays 70, 80 or 90% and the insured (you) would be responsible for the remaining 10,20 or 30%
Deductibles- The amount you are responsible to pay before the insurance company starts to pay their share.
HMO’s Also known as a Health Mantenance Organization, is a type of insurance notion that focuses on the long term care of its insured and is normally less expensive than a Major Medical Plan. Each insured has a Primary Care Physcian, who is responsible for providing preventative care and coordinating care for the insured. If additional specialists or hospitalization is neccessary. You the insured may need to get prior authorization, you may need a referral from your primary care physcian.
This keeps the costs down, You would have co-pays, and you may have to stay in network.
The HMO is known as the co-pay plan and the majority of HMO’s only cover in-network doctors and hospitals, and you are required to get a referral before seeing a specialist or your claim can be denied.
PPO Plans- Preferred Provider Organizations, is similar to an HMO, as there is a network of physcians and hospitals, but unlike an HMO, an insured (YOU) is not limited to only in network physcians and hospitals and can go out of network and see who they would choose to see. Keep in mind though, if you stay in network, your copays and deductibles will be less for in network services.
In addition, network physcians determine reasonable charges, therefore is an out-of-network physcian charges more for services, the insurance company will unruffled pay only 80% of the in-network charges any additional fees the insured would be responsible. In that scenario the insured will often pay higher fees for out-of network services.
Most people prefer the freedom to choose their beget doctors and not be small to one network.
POS Plans- Point of Service Plans
Is considered to be a combination of a PPO and an HMO. The insured (you) chooses a Primary Care Physcian and all health care should start with the patient consulting the physcian. The doctor authorized a referral to search for a specialist, in or out-of-network. Keep in mind that with an HMO, the specialist must be in network in order for the service to be covered.
If a patient chooses to study a specialist without a referral, the insurance company may choose not to pay for the services. A POS belief is also considered to be a managed health care plan, but the insured has the capability of having more options than the standard HMO Plan.
Health Savings Accounts – HSA’s
A health Savings Account is an alternative to traditional health insurance, it is a savings product designed to offer a different way for consumers like yourself to pay for their own healthcare. HSA’s enable you to pay for current health expenses and to place for future edifying medical and retiree health expenses on a tax-free basis.
A Health Savings Account combines a high deductible health insurance with a tax-favored savings account. Money in the savings account helps pay the deductible. Once the deductible is met, the insurance company starts to pay. Money left in the savings narrative earns interest and is yours to keep.
An HSA account can increase your health insurance buying power by:
- Typically lowering your health insurance premiums, but still providing quality care
- Regaining more control of your health care dollars
- Paying your out-of-pocket health care expenses with tax advantaged savings
- Spending your HSA Savings tax free to help pay your health insurance deductible for qualified medical expenses including prescriptionsm vision or dental care.
- Providing one simple calendar year deductible per family
- Tax-deductible- contributions to the Health Savings legend are 100% deductible up to the legal limit just like an IRA ( Individual Retirement Acccount)
- Tax-Deferred interest earnings accumulate tax-deferred and if veteran to pay qualified medical expenses are tax-free
- HSA money is yours to keep, Unlike a Flexible Spending Account often provided by an employer, unused money in Your health Savings Account, isn’t forfeited at the demolish of the year, it continues to grow tax-deferred.
Why a High Deductible Health insurance Plan?
To get the benefits of an HSA, the law requires that the savings account be combined with a high deductible health insurance plan. High deductible health insurance plans cost less than the traditional $250-$500 deductible coverage, because the insurance company doesn’t have to process and pay claims for routine, low-dollar medical care.
The Co-pay Plans
Co-pay plans provide traditional insurance benefits for people who need routine health care. Co-pay plans are similar to traditional coinsurance offered by an employer that includes a copayment amount for out-of-pocket medical expenses. If you are looking for a plan that offers co-pay benefits, preventative care, and prescription drugs, then the copay thought is best first-rate for you.
When you use a preferred network doctor for an office visit, carriers will pay 100% for history and exam fees after a specific co-pay amount. Office expenses outside your network will not be eligible for co-pay benefits typically.
additional features include:
- Prescription Drug card benefits
- Comprehensive coverage for inpatient and outpatient medical expenses
Short term Health Insurance
Life can change quickly and you may need the protection of a short term health insurance plan. Short term medical insurance products can be an alternative to Cobra health insurance and can provide temporary health insurance for individuals who may have:
- Lost coverage through a recent job or life changes
- Recently graduated and are no longer covered by parent’s plan
- A job as a seasonal worker
- Begun enjoying early retirement and are waiting for medicare to kick in.
- Recently completed Cobra coverage
Short-term health plans offer easy to understand temporary medical insurance designed for individuals and families in times of uncertainty.
Guaranteed Drawl Plans-
These plans are a nickel a dozen, there a whole lot of these plans out there, and most people are very confused about them. the majority of Guaranteed issue plans are not traditional insurance plans, what they are in actuality are Hospital idemnity plans with or without additional medical benefits.
These plans do not have medical questions that need to be answered, there is no underwriting, the enrollment into these plans is usually one page or less. Whenever you spend these plans, the benefits are paid directly to you. Some people call these reimbursement plans.
If you can’t afford traditional health insurance, or have been turned down for health insurance due to pre0-existing conditions, these plans are good alternatives.
Terminology that you should know
Encourage Period- a specified period of time during which benefits for covered services must be used. Example, a calendar year ( january-december) or a contract year ( 12 consecutive months following your effective date of enrollment).
Benefit Period Maximum- The total amount your insurance plan will pay for covered medical expenses during each benefit period.
Calendar Year
The 12-month period begining on January 1st and ending December 31st.
Coinsurance – A cost- sharing requirement under which you are responsible for paying a certain percentage of the covered medical expenses, after you meet your deductible (if applicable).
example
you have a 100,000 hospital bill and a plan with a $5000.00 deductible and 80/20 co insurance
100,000 hospital bill
5,000 deductible
95,000 balanace
You would pay 20% of the 95,000 with a maximum out of pocket that varies from carrier to carrier and the carrier would pay 80%, and then 100% above your maximum out of pocket.
There would be additional costs over and above this if you use providers who are out of the carrier’s network they provide. This is very important issue for most people. You should always speak to an agent or broker concerning each carriers plan design.
Contract Year – The period of 12 consecutive months following the effective date of your agreement and each subsequent 12-month period that the agreement is in effect.
Co-payment – a cost sharing requirement under which you are responsible for paying a place dollar amount for covered medical expenses. Some plans require you to meet your deductible first and others don’t.
Deductible- amount you must pay out of your own pocket before the plan begins to pay for any covered services.
Effective Date – The date, as shown in your carrier records, on which ytour health care coverage begins.
Guaranteed Issue- Plans that accept all applicants without regard to the applicants state of health.
Medically Underwritten – Plans that base acceptance for enrollment on your health status, positive by the answers you give on a medical questionnaire.
Health Savings Record (HSA) A savings account for out-of-pocket medical expenses in which contributions and interest earned are tax-exempt and withdrawals are tax-free if funds are used for eligible medical expenses. An HSA is used in conjunction with a high deductible health view.
High Deductible Health Understanding ( HDHP) – a health plan that offers substantial savings in monthly premiums in conjunction with higher than usual deductible levels. When you enroll in a qualified HDHP, you may be able to take advantage of the tax savings offered by a health Savings Anecdote (HSA).
Health Maintenance Organization (HMO) – a health care program that provides coverage only for those eligible services received within the insurance carrier’s provider network. There is no reimbursement to you if you use a doctor or hospital that does not participate in the carrier’s network ( unless it is an emergency).
Lifetime Maximum- The total amount your insurance plan will pay for covered medical expenses while you are enrolled in your plan. With some carriers they also limit how much of the lifetime maximum you can use per year.
Networks- These are companies that have negotiated lower rates with providers such as doctors, hospitals, outpatient care facilities, and other health care providers. Some insurance carriers have their have network contracts with these providers. Every insurance carrier will either employ their own network or they will buy the services of an independent network company to keep their costs lower when you utilize the plan.
These discounted rates get passed down to you if you buy a plan where you’re deductible needs to be met first. When calling a provider to check whether or not they participate with your insurance carrier, always tell them what network your carrier uses. It is not unusual for a provider not to recognize your carrier but will recognize the network provider.
Non-participating Providers – Providers that do not have agreements with the network your carrier is providing to you. These providers may “balance Bill” you for any differences between the carriers payment amount and the provider’s actual charges. Insurance carriers who pay UCC verse RCC give you more protection against and financial surprises when you use your concept.
UCC- Usual, Old-fashioned Charges
RCC- Reasonable, Customary Charges
Out-Of-Pocket Maximum -The maximum amount you will pay out of your own pocket for covered medical expenses during a given encourage period. Normally this requires that you stay within the network your carrier provides. Some companies have limits even if you are out of the network while others don’t.
Participating Providers- Providers that have agreements with networks to accept carriers payment amounts as payment-in-full for covered services ( after any applicable deductible, co-payments or co-insurance).
Pre-Existing Condition – a condition for which medical advice or treatment was recommended by a physcian or other medical provider within a carrier specified time frame immediately before your effective date.
