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DO YOU UNDERSTAND YOUR HEALTH INSURANCE COVERAGE?
Health insurance can be very confusing. There are several components, all with different terminology. In addition, changes have occurred due to health care reform. I will try to simplify some major factors related to health insurance.
If you don’t have health insurance, you need it.
There are many people who think that either they are healthy and don’t need insurance, or that if something happens to them the government will take care of them. Things happen, and little things can cost a lot of money. For example, a broken bone can cost over $10,000 in medical bills. An illness or accident can put you in debt for years.
Learn what options are available to you.
Many companies provide group health insurance to their employees, and larger companies are now required to provide health insurance to their full time employees, which are considered 30 hours or more. Does your employer provide and pay for your coverage? How about the coverage for your dependants? People tend to think that group insurance is less expensive since you are buying in bulk. Unfortunately, this is not the case.
Individual/family insurance can be obtained either by going directly through an insurance carrier, or by going through the Federal Health Insurance Marketplace. I can help people pursue both of these options. The reason to go through the Federal website is if you think you may qualify for a subsidy based on your income. All plans have to include the same benefits, referred to as Essential Health Benefits. They are divided by metallic levels of coverage, based on the actuarial value of the plans (Platinum-90%, Gold- 80%, Silver-70%, and Bronze-60%). In general the higher the metal level, the more you pay (your monthly premium), and the smaller the copays and out of pocket expenses.
There is no longer medical underwriting and preexisting limitations. However, there are certain periods of time in which you need to enroll to obtain this coverage. The coverage period for individuals is calendar year, January through the end of December. Please refer to my newsletter archives section to learn more detailed information about all of these topics.
Understand your policy.
Too often when meeting with employers, individuals and families, they do not know what type of health coverage they have and how it works. It is very important to know what is covered and how to utilize it to your advantage. First, is there a network of providers and hospitals that you need to use? For the most part, this is the case. If you go out of network, except in the case of emergencies, you may not be covered or your coinsurance may be significantly higher. Know how to access your network; you can usually go online to the carrier’s website and look up provider search.
Does your plan have a deductible, and if so what goes towards that deductible?
A deductible is a specified amount that you have to pay prior to having your coverage paying. This is a calendar year amount and varies depending on your plan. Most often, preventative care is automatically covered without being subject to your deductible. Some plans have co pays for doctor visits, emergency room, and prescriptions, while basically most of the other components go towards the deductibles. With qualified high deductible health plans, mostly all expenses go toward your deductible. In addition, with these plans, many of which you make into health savings accounts (HSA), there may be aggregate deductibles. Basically that means if more than one person is on the plan you have to meet the family deductible, there is no longer an individual deductible.
Coinsurance is a percentage of the covered cost that an insured has to pay after the deductible has been met. For example, if a policy has a $500 deductible with 90% coinsurance, you would have to meet the first $500 of medical costs, following which you would pay 10% of the costs and the insurance carrier would pay the remaining 90%. Out of pocket maximum is another very important and necessary part of all insurance policies. Simply, this is the maximum you would need to pay in expenses prior to your carrier paying 100%. So, with the above example, lets say you have a hospital bill of $100,000 (which unfortunately is easy to accumulate). You would pay 10% up to a certain number, at which time you would then be covered at 100%. Hence, it is the maximum coming out of your pocket. This number does not include your premiums and out of network costs.
Be a smart consumer.
More and more employers as well as families are switching to higher deductible plans and/or coinsurance plans to reduce their monthly premiums. You have to be able to look at the whole picture. What are you saving on your lower premiums? Does it justify taking a deductible or higher deductible? What is your maximum exposure? Learn about Health Savings accounts (HSA), and in terms of employer groups, health reimbursement accounts (HRA) and flexible spending accounts (FSA). Consult your accountant regarding tax advantages to you as an individual and/or employer.
Learn what you can about the health care reform act.
On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act. This law specifies certain time periods in which major provisions need to take place. Simplistically again, some of the earlier provisions include:
Dependants are able to remain covered by their parent’s health insurance up to their 26th birthday.
There is no longer any medical underwriting and no preexisting limitations can be imposed.
Insurance companies will not be able to impose annual and lifetime limits
There are certain times during the year that you have to enroll in individual/family coverage- Open Enrollment, which is supposed to be November 1st through January 31st for 2017, and Special Enrollment, which can only occur if you have a qualifying event, such as a loss of employer coverage, a move to a new area, etc. This needs to happen within 2 months from the time the qualifying event occurred, and the coverage always begins the first of the month.
Small business tax credits are available to certain small employers that provide health insurance to their employees beginning with the 2010 tax gear. There are certain guidelines regarding eligibility of employer groups.
There are several other changes with specific time guidelines. Two good resources to access this information are the IRS and Kaiser Family Foundation.
Perform a yearly checkup.
Things are constantly changing– always review what options are available to you. What is being offered by your employer? What is the percentage you are paying, if any, for the premium for your family? If the premium rises (which unfortunately happens all the time), quote other carriers for comparable coverage. Employers should be working with their brokers a couple of months prior to renewal to make sure that their plan is the most comprehensive and cost effective for their company.