Health Insurance
Take time to learn the facts and you’ll find affordable health insurance options.
For anyone living in, or considering moving to, the U.S. affordable health insurance is one of the most important personal planning topics to be considered. Unlike Canada, the U.K. and much of Europe, no single-payer public health care system is available in the U.S., although the current political climate seems to indicate a move in that direction. In the meantime, the burden and obligation of providing adequate individual and family health insurance coverage falls directly on the shoulders of the private citizen.
Before beginning the search for the right policy for you and/or your family it’s important to become familiar with some of the most important terms regarding the cost of health insurance plans in the U.S. While there is really no such thing as cheap health insurance, your understanding of and attention to these terms can be instrumental in minimizing the cost of your coverage.
When trying to craft an affordable health insurance policy, one of the most important considerations is the amount of the “deductible” amount under the policy. This is the amount of money that you, the insured, will be required to pay for your health needs before the benefits from those health insurance plans can be used. The deductible is usually expressed as an annual amount that must be met each year although some expenses, such as regular visits to the doctor, may be covered even before the deductible has been met. In general, the higher the amount of the annual deductible, the lower the monthly insurance premiums will be.
Another important factor in finding an affordable health insurance policy is the structure of the “co-payment” required for various services. This is the amount that the insured is required to pay for covered products or services before the insurance pays the balance. For example, if a doctor’s appointment costs $100, the insured will have to make the co-payment” (for example $20) and then the insurance policy will pay the balance. Or if a prescription costs $40 the insured will have to make the “co-payment” (for example $10) and the insurance policy will pay the balance.
When comparing various health insurance quotes, make sure that the dollar amount of both the deductible and co-payment amounts under each policy is identical so that the cost comparisons are accurate. Most health insurance companies will have several options for each item so you should be able to ask for quotes with identical costs for these two items.
Perhaps the most common concern people express when trying to find an affordable health insurance policy is the risk of incurring health care expenses that are so large they could wipe out an entire lifetime of savings. Many people feel capable of meeting the more common and affordable health care expenses, such as doctor visits and prescriptions. But the prohibitively high costs of items such as heart surgery or extended cancer treatments can be financially devastating. This factor is directly related to a policy’s “maximum annual benefits” and “maximum lifetime benefits”.
If these enormous potential health care costs are of concern to you, and if the cost is within your budget, I’d strongly suggest acquiring a policy with no maximum annual benefit and unlimited lifetime benefits so that the full amount of those costs will be covered.
One of the most controversial topics in today’s debate over affordable health insurance is the term “pre-existing condition”. This refers to any medical or health related condition that a person might have prior to obtaining a health insurance policy. This can be a critical factor because many health insurance companies refuse to cover certain pre-existing conditions while others offer the coverage but only with higher premiums and/or a waiting period after the policy is issued before health issues as a result of those pre-existing conditions are covered.
Now that you’re familiar with the important terms and concepts of affordable health insurance it’s time to consider what type of policy best fits your specific personal goals and health requirements. With insurance planning, it’s usually best to consider your most likely needs as well as your exposure to potential costs if the worst were to happen. If you’re in poor health and anticipate frequent health expenses each year, you might want to consider a plan that is structured to cost you the least amount out of pocket each year thanks to low deductibles and small co-payments.
But if you’re young and healthy with few health expenses anticipated each year relatively cheap health insurance, with high deductible and large co-payments but with no maximum annual benefit and unlimited lifetime benefits, might be more appropriate.
Once you’ve determined the features that suit your situation the best the question becomes a matter of reviewing several health insurance quotes to find the most affordable health insurance option. In the U.S., the vast majority of people who have health insurance purchase that insurance through their employer. And there are two primary types of employer-sponsored insurance plans available: Health Maintenance Organizations and Preferred Provider Organizations.
A Health Maintenance Organization, or HMO, is a network of doctors, hospitals, health care providers, and pharmacies that offer their services and/or products at reduced costs to the members of the HMO. As a member of the HMO you, the insured, select a Primary Care Physician from the list of providers that are available in the network. This Primary Care Physician then coordinates your health care needs with the other health care providers.
The primary advantage to an HMO is the fact that it offers its members low out-of-pocket expenses when compared to traditional plans. Also, HMO members do not have to meet an annual deductible amount before their medical coverage begins. The main disadvantage to the HMO is that it is more restrictive in terms of the health care providers you may choose. The Primary Care Physician must be a member of the HMO so if your current doctor is not a member you would have to switch to a new doctor. And if you need to see a specialist you must see one that is also within the HMO and has been referred to you by your Primary Care Physician.
A Preferred Provider Organization, or PPO, is similar to an HMO in that it is also a network of doctors, hospitals, health care providers, and pharmacies. A member of a PPO, however, can choose to see specialists outside of the PPO and still receive coverage from their insurance provider. Using such an outside provider will, however, usually result in a higher cost than for an in-network provider.
The advantage to a PPO is the fact that it is not as restrictive as an HMO and provides more freedom for you to use a health care provider of your choice. The disadvantage is the fact that a PPO is a more expensive alternative than the HMO and generally requires that a pre-determined deductible amount be met before insurance coverage begins.
HMOs and PPOs are examples of group insurance plans that usually offer significant cost savings when compared to private individual or family health insurance plans. The reason that these are more affordable health insurance options in terms of premiums paid by members of the group is the fact that the issuing insurance company is able to spread its risk over a large number of people. Of course, depending on the make-up of the group, older and less healthy members may pay less than they would for individual coverage while young healthy members may pay more. In addition, under current law, insurance provided through employer group plans also provide some tax benefits to the insured.
But even without the availability of a group or employer sponsored health insurance plans, individuals can still find good alternatives for their insurance needs. One of the best options to consider for affordable health insurance outside of group plans is a Health Savings Account, or HSA. This is a savings account with tax advantages that is available to U.S. taxpayers who are also enrolled in a High Deductible Health Plan that will to protect the insured against major or catastrophic health costs.
In an HSA, the insured may contribute funds to the account that are not subject to federal income taxes when deposited. In 2009, individuals can contribute up to $3,000 and families up to $5,950 each year to these accounts, with special catch-up provisions for those over 55 years of age. The insured can then use these funds to pay for a variety of medical plan health costs covered by the High Deductible Health Plan as well as additional items such as dental care, eyeglasses, hearing aids and transportation costs related to medical care. Even non-prescription, over-the-counter medications are eligible. And any funds within the HSA that aren’t spent can remain and accumulate in the account.
The availability of affordable health insurance in the U.S. is excellent, although the lack of a single-pay, government supported system may be problematic to those who have become accustomed to that structure. If you first become familiar with the health insurance industry and its terms, and then study and evaluate all of your options, you’ll find a host of excellent alternatives that are available. But remember, the current landscape of health insurance in the U.S. may change dramatically in the near future so make sure you are using the latest facts in your evaluation.
