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  • Health Care Coverage Basics

    It's just an unfortunate fact that health care costs are on the rise, and the cost of health insuranceis rising along with it. Millions of families currently go without any type of health care coverage, and health care costs are often at least partially responsible for about half of all bankruptcies. The leading reason for these families to go uninsured is simply the high cost of the insurance premium.

    When you don't have much expendable cash, insurance of any kind is easy to justify putting off, but it can be an extremely costly mistake. Put the care of you and your family's health at the top of your priority list.


    First, let's be sure to understand basic health insurance terms.
    Premium is the monthly fee for your health coverage. You may choose to pay your premium six months to a year in advance, and receive a discounted premium for doing so.

    Network is the group of doctors, hospitals, and other medical care providers that have agreed to provide services under the health plan's conditions, normally with a lower pre-negotiated fee for those services. The insured may be required to stay within their plan's network to receive coverage benefits. Some plans allow you to go outside of the network, but will require you to pay more of the expense if you do.

    Deductible is the yearly amount the insured has to pay before the health plan will begin to cover health care costs. The deductible usually applies to hospitalization, x-rays, lab work, and other services needed due to injuries or illnesses. You may choose a deductible as low as $0 to as much as $10,000, and the higher your deductible, the lower the premium.

    Co-insurance is the percentage amount of the expense that the insured is to pay that is above and beyond the deductible, up to a certain point. The health plan will specify the maximum out-of-pocket for the insured; your health plan will pay for all covered expenses once you get to that limit.

    Co-pay is the pre-determined, flat fee the insured has to pay for services, and usually applies to trips to the doctor's office.

    First-dollar coverage means that the health plan will pay for the entire amount, with no deductible, co-pay, or co-insurance. Some plans give first-dollar coverage for preventative care, such as routine annual physicals and immunizations.

    Let's now take a look at different types of health care plans.
    Health Maintenence Organization (HMO) is usually the least expensive type of plan, but also has the least flexibility. HMOs required that you stay within your network to receive coverage for services. There is typically no deductible and no co-insurance. HMO services are pre-paid with your premium, and come with a small co-pay of about ten to twenty dollars. HMOs require that you choose a primary care physician (PCP), and you must be referred by that doctor to any specialists; they may not cover the cost if you by-pass your PCP and go straight to a specialist. Medical professionals within the HMO network typically are employees of the HMO and you must use doctors and hospitals within the HMO network to receive benefits.

    Preferred Provider Organization (PPO) is more expensive than an HMO but allows flexibility in choice of doctors. PPOs have a deductible and co-insurance. Your deductible and co-insurance usually doesn't apply to office visits; you will normally have a flat-fee co-pay without meeting the deductible. PPOs offer pre-negotiated fees at a reduced rate within the network, so you will save money by staying within the network. You will still receive coverage outside the network, but it will cost you more out-of-pocket. You are not required to choose a PCP, and you may go straight to a specialist without a referral.

    Point of Service (POS) plans work like an HMO but also offers additional coverage for medical services outside the network, like a PPO. You will still need to choose a primary care physician, who will refer you to specialists within your network. If you choose to go outside the network, and straight to a specialist without a referral, you will probably have to pay out-of-pocket at the time of service, and submit a claim form for reimbursement from the insurance company. Keep in mind that you will also pay more of the expense for bypassing your primary care physician.

    Indemnity Plan is the original standard commercial health insurance. There is no network; the indemnity plan does not negotiate discounts with medical care providers,and so you may go to any doctor you choose at the same cost to you. Indemnity plans do not have a co-pay, and you will have to meet your deductible before any expenses are covered. At that point, you will also have to pay the co-insurance portion until you reach your out-of-pocket cap. PPOs and POS plans have a built in indemnity plan, and so that is why they can provide coverage for out-of-network expenses. Your total out-of-pocket expense will typically be higher with an indemnity plan, since there are no in-network discounts.

    High-Deductible Health Plan in conjunction with a Health Savings Account (HDHP/HSA). The HDHP/HSA is a combination of a health plan, typically a PPO, in addition to your own personal tax-advantaged savings account. The HDHP premiums are separate from you HSA contributions, though some insurance providers may allot a portion of your premium to your HSA. HDHPs may pay first-dollar coverage for preventative care, but you will be required to meet your deductible for any type of injury or illness before the health plan takes effect. Premiums are much lower due to the high deductible, and so the savings can be put into your HSA to allow you to save or invest for future health care expenses.

    Most health care plans limit coverage for pre-existing conditions.
    When you are shopping for health care coverage, the insurance company can give you a rough quote based on your age, sex, and other risk factors such as whether you use tobacco. But you won't be able to get an exact quote until you actually apply for coverage, and answer their in-depth questions about your health. They want to know all about your current state of health, and will ask about every possible condition known to man. It's important that you answer these questions honestly; they may not cover later you if they find out you knew about a health condition and failed to report it. They will be able to tell you what your actual premium will be once they have the full picture of your general health.

    If you currently have health care coverage, pre-existing conditions should not be a problem. If the underwriter decides their company will provide you with health coverage, they are required to cover any pre-existing conditions if you are simply changing health care plans or insurance companies. However, if you do not currently have health insurance, the insurance provider may limit coverage for pre-existing conditions for a year. Maternity coverage also has a twelve month delay before you begin to receive those benefits.

    Those with some medical conditions may find that they cannot get health insurance, or that it's so expensive that it would be impossible to afford. Most states have programs to help those in that situation. The insurance will still be expensive, but will be more affordable than the alternative. If you find that you are uninsurable due to health issues, check to see if your state has a health insurance risk pool. Find a list of state contact numbers at www.naschip.org/states_pools.htm.



    Sources:
    National Coalition on Health
    nchc.org
    insurance-now.com
    healthinsurance.org
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