Saving Money - Increasing Gas Mileage - Health Insurance
GETTING THE BEST HEALTH INSURANCE FOR YOUR MONEY
If you are waiting for a government sponsored national health care program or your employer to provide you with medical insurance you may want to reconsider. The cost of health care is increasing annually in the United States and most likely will continue to do so in the foreseeable future. Reasons for these increases include the high cost of research and development of new drugs/medical technologies, the aging Baby Boomer population, longer life expectancy and prolonged medical treatments.
Before shopping for health insurance, there are a number of things you should know and think about. Choosing the best health insurance plan and health care provider should be based on your individual needs. Possibly the most important recommendation is to obtain some type of heath insurance while you are young and before you are sick and need it.
Reasons to obtain health insurance at an early age or in good heath
• Your annual premium will be significantly less than someone older or in poor health.
• Since health care premiums increase at a set percentage every year, the actual dollar amount of these increases will be lower for many years. EXAMPLE – 22 year old male with a premium of $1200 per year will only experience a $36 increase if the annual premium percentage increase is 3%. Over an eight year period the yearly insurance premium would increase to $1520. If the same male waited until he was 30 years old to obtain insurance his starting rate may be $2400 per year with annual premium increases of $72.
• Pre-existing conditions can significantly increase your insurance rates, have treatment for the condition excluded from your policy or make you uninsurable. Even if your employer has a Group Policy you may be required to pay a 15% premium depending on the size and age of the group.
• Family medical histories are considered future health indicators. If family members have had a history of heart disease, diabetes, etc getting health care coverage before disease occurs can protect you from the disadvantages and expenses of a pre-existing condition.
• A catastrophic injury or illness can happen at any age. Being young and healthy does not mean that you are immortal. If you are on a tight budget obtain basic coverage with a high deductable.
Health insurance policies come in many sizes and shapes. COSTS AND BENEFITS may vary widely so it’s important to choose the type of insurance policy that suites your budget and medical requirements.
Types of Health Care Policies
Individual or Group Health Insurance - If you work full-time for a company they may offer a Group Health Insurance Policy. Group policies are often less expensive and usually require employers to contribute up to 75% of the premium.
If you’re self-employed or unemployed, you may be able to get group coverage through an association of some kind, such the American Associated of Retired Persons (AARP), a civic group or your local chamber of commerce.
Self-employed individuals can deduct health insurance premiums (your monthly or quarterly payments) from your federal income taxes, just as you can deduct the portion of the premiums you pay for a group policy.
IF AVAILABLE, GROUP HEALTH INSURANCE IS USUALLY THE MOST PRACTICAL AND AFFORDABLE OPTION FOR MOST PEOPLE.
There is at least one EXCEPTION. If you’re a young person who doesn’t expect to stay long in your current job, you may be better off buying and keeping INDIVIDUAL HEALTH INSURANCE, because you can get it at much lower premiums and Cobra may be expensive.
Another big advantage of a group policy is that you may not have to worry about a PRE-EXISTING CONDITION. This is defined by most insurers as an illness or injury that first appeared within a certain period, often two years, before the policy was issued. Many insurers will exclude coverage for such conditions. In some cases, pre-existing conditions may be covered IF they are disclosed on the insurance application.
Group policies generally cover you regardless of any pre-existing condition if your employer offers group coverage.
If you do have a pre-existing condition and are not covered by a group policy, you may still qualify for individual coverage under the Health Insurance Portability and Accountability Act (HIPAA), which requires that pre-existing conditions be covered for anyone who has previously been insured for at least 19 months under any creditable policy, has not had a lapse in health insurance coverage of more than 63 days, has exhausted any other coverage and is not eligible for Medicare or Medicaid.
Fee-for-service or managed care - In addition to the distinction between individual and group health insurance, there’s a distinction between FEE-FOR-SERVICE HEALTH INSURANCE and MANAGED CARE HEALTH PLANS. Generally speaking, managed care is less expensive, but you lose some of your freedom of choice.
FEE-FOR-SERVICE - you can choose all of your doctors and other health care providers. The insurance company reimburses you based on services performed. You may have to pay for some services yourself after meeting an annual DEDUCTIBLE (the amount you must pay OUT-OF-POCKET before insurance kicks in – usually about $500), but there also may be an annual out-of-pocket maximum. One drawback is that you must fill out forms and keep receipts to get reimbursed. Also, WATCH FOR POSSIBLE LIMITATIONS ON SERVICES COVERED.
MANAGED CARE - there are no forms to fill out or receipts to keep, but you must choose your doctor or other health care provider from a pre-determined list, or NETWORK. You start by choosing a primary care physician, who then coordinates your care, including referrals to specialists. Your payments are based on a pre-determined rate schedule.
Types of Managed Care
PREFERRED PROVIDER ORGANIZATION (PPO) - Under this type of managed care plan, you pay for health care on a fee-for-service basis from a pre-determined network of providers who have agreed to accept a discounted schedule of fees. You can, however, go outside the network and still get coverage, although in most cases you will have to pay CO-INSURANCE.
HEALTH MAINTENANCE ORGANIZATIONS (HMOs) - are the least expensive form of managed care. You will pay a fee, or CO-PAYMENT, for routine services such as drug prescriptions and visits to the doctor. However, because you cannot be covered for any service unless your primary care physician refers you, the HMO is able to keep both its own and your costs down. The drawback is that you lose some of the flexibility you get with a PPO.
POINT-OF-SERVICE PLAN (POS) - you get back some of that flexibility. Under this type, which is fee-for-service, if you want to see a doctor who practices outside the network, you may do so. If your primary care doctor refers you, you are still covered for all or most of the cost. If you go to an outside health care provider on your own, however, you will be required to pay CO-INSURANCE, so BE CAREFUL: the costs of co-insurance can vary widely.
EXCLUSIVE PROVIDER ORGANIZATION (EPO) - This is much like a PPO, but you will not be reimbursed for health care services performed outside the pre-determined network. (Some EPOs allow partial reimbursement for emergency care outside the network.) The major difference between a PPO and an EPO is the cost to you. PPO members are reimbursed at a lower rate and may pay higher deductibles or co-payments. In return, they get greater flexibility in coverage.
As with most health insurance plans, it’s UP TO YOU to decide what is more important to you: LOWER COST OR GREATER FLEXIBILITY.
Government Insurance and Health Savings Accounts
A different kind of insurance from those mentioned above is GOVERNMENT-SPONSORED HEALTH INSURANCE. Government plans include MEDICARE for people over age 65 and MEDICAID for low-income people who qualify. You can find out more about Medicare and Medicaid through the U.S. Department of Health and Human Services in Washington.
There is one other type of government-sponsored health insurance of which you should be aware. A program known as SCHIP (State Children’s Health Insurance Program) is available for the children of low-income people who are not eligible for Medicaid. Check with the insurance department of your state for more information. BE CAREFUL: not all states refer to the program as SCHIP.
Finally, there is an entirely different way to help pay your health care expenses. It’s called a HEALTH SAVINGS ACCOUNT. HSAs are designed to allow individuals to save for qualified medical expenses on a tax-free basis. Any adult who is covered by a high-deductible health plan and has no other primary coverage is eligible to establish an HSA for any qualified medical expenses not covered by the plan. More information is available from the U.S. Department of Treasury in Washington.
What is Cobra and how does it work?
Although there are many advantages to employer-sponsored group health care coverage, there is one big disadvantage: if you lose or quit your job, you lose your health insurance. If that happens, your choices are to get coverage through your spouse’s policy, buy individual insurance, buy group insurance through an association, or participate in the COBRA (Consolidated Omnibus Budget Reconciliation Act) program. This federal law requires employers with at least 20 employees, if they offer group health insurance, to offer continuation of coverage, for both you and your dependents, for a period of up to 18 months if you lose your job.
BE WARNED, however: under COBRA, the company contributes nothing; YOU MUST PAY the entire premium. A potential problem with obtaining Cobra may exist if your employer goes bankrupt. If your employer files for Chapter 11 bankruptcy your policy may not be affected while a Chapter 7 bankruptcy will terminate your health insurance policy. If your find yourself in this situation you may have other options. If your health care plan was outsourced contact the policy administrator. To find out more visit www.askebsa.dol.gov , www.dol.gov/ebsa or http://www.hipaa.org/ to learn if your plan is portable.
KEEPING COSTS DOWN
Health insurance can save you a lot of money, but can still be expensive. Here are a few brief suggestions for reducing or controlling your costs:
• The most obvious way, of course, is to choose a managed care plan through a group policy, then stay as much as possible within the approved network of doctors and other health care providers.
• You can cut your premiums by choosing to pay a higher deductible. Under that option, you pay more OUT-OF-POCKET costs each year before your policy begins to cover you.
• You can opt for BASIC AND ESSENTIAL HEALTH INSURANCE, which can cover you if you are hit with catastrophic health expenses. With this type of insurance, you’ll pay a very high deductible.
• Once your DEPENDENT CHILDREN reach the age of 19, they are no longer covered under your family health insurance policy unless they are FULL-TIME STUDENTS. Therefore, if you have dependents over the age of 19 who are not in school and you can’t afford conventional individual insurance for them, you may want to consider a basic and essential (catastrophic coverage only) policy on a temporary basis.
Questions to ask when choosing a health care provider or obtaining medical insurance
When shopping for health insurance, there are certain basic questions you should ask before making a decision, including:
• What type of coverage does the policy provide?
• Are there limitations or exclusions?
• Are preventive services covered?
• Are prescriptions drugs covered?
• What provisions are there for emergency care?
• What if you are out of town or out of the country and need medical care?
• What is the monthly (or quarterly) premium? (Note that there are both individual and family rates.)
• What is the deductible?
• What is the co-insurance rate or co-payment?
• Is there a pre-existing-condition exclusion?
• Is there an annual maximum on your out-of-pocket expenses?
• Is there an annual or lifetime maximum on how much the insurer will pay?
Additional questions to ask if you are considering a managed care policy
• How many doctors are on the pre-determined list of network providers?
• How are referrals to specialists handled?
• What is the procedure if you want to change primary care physicians?
• What is your out-of-pocket cost if you are treated by doctors or other heath care providers outside the approved network?
Glossary of useful health insurance terms
Premium - The amount you pay, usually monthly but in some cases quarterly, to maintain insurance coverage.
Out-of-pocket expense - Any additional amount you must pay for actual medical services performed.
Co-payment - The amount you must pay out-of-pocket as your share of the cost of a particular doctor visit, medical treatment or diagnostic test.
Co-insurance - Similar to a co-payment, but you pay out-of-pocket a percentage of the cost (usually 20 percent) rather than a fixed share.
Deductible - The amount you must pay out-of-pocket each year for doctor visits, prescription drugs and other medical services before your health plan begins paying anything.
In-Network Provider - In managed care plans, a doctor or other health care provider who is on a pre-determined list of providers the policy-holder is either required to see or pays less out-of-pocket to see.
Out of Network Provider - In managed care plans, a doctor or other health care provider who is not on a pre-determined list of providers and for whose services the policy-holder must therefore pay an additional out-of-pocket cost.
Exclusions - Many insurers exclude certain health care services from coverage. In such cases, you must pay the full cost.
Coverage Limits - Some health plans have maximums on what they pay for specific medical services. Some also have annual or lifetime maximums. Once the maximum has been reached, you must pay for all additional services.
Out-of-pocket maximums - The reverse of coverage limits. In this case, there is a limit on how much you must pay out-of-pocket either for a specific benefit category, such as prescription drugs, or in any given year.
KEEP IN MIND: Whatever health care coverage you choose to obtain, it may not apply to any or all medical services outside this country, so check with your insurance company before traveling. If you’re unsatisfied with the out-of-country coverage, you have the option of buying separate TRAVELERS’ INSURANCE.
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