Personal Health Insurance
For those individuals who do not have health insurance through their employer, becoming an informed purchaser about personal health insurance is absolutely necessary. There are numerous health insurance policies that can be tailored to provide good health insurance at reasonable prices.
The health insurance reality is that personal health insurance is considerably more expensive than group health insurance. This is because the insurance company has more exposure but less risk. Health insurers are supported by data indicating there is safety in numbers.
There is no way around the fact that health insurance is a necessity and that the better the coverage is, the more it will cost. The cost of health insurance is determined by a number of factors, including but not limited to:
- Previous medical history
- Risk factors like smoking
- The choice between single individual or family coverage
- The type coverage selected
- The amount of deductibles
- Inclusion of certain riders, like prescription coverage
- The options selected by the policyholder
Like all other insurances, health insurers evaluate risk factors that determine the premium amount.
COBRA
Because of the recession and nationwide shifts in employment, many workers who received health insurance from the employer are entitled to continue that coverage through the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985. Under the law, an individual who has been terminated from a job where he or she enjoyed health insurance has the right to continue that coverage for 18 months.
COBRA does require the individual to make the payments, but the former worker does not lose the insurance until 18-months after termination or when he or she cancels the existing policy. During that 18-month window, the individual can procure other insurance and then terminate the existing coverage.
Many workers are surprised by the amount of the full premium during the COBRA. If the worker is unemployed, the cost of health insurance is a necessary burden. One clear advantage of the COBRA option is that the individual or family cannot be denied of coverage because of pre-existing conditions.
If a spouse received health insurance from a previous job, that individual may be able to be added to the spouse’s health insurance plan under a family coverage. Family coverage is more expensive than two individual policies but if the spouse’s employer is contributing to the policy, the offset may be well worth it.
If the individual becomes self-employed, he or she may be able to link with group rates through a local Chamber of Commerce or through a trade organization or through the National Self-Employed Association.
Fee For Service
Fee-for-service health plans are gradually becoming a thing of the past. However, some health insurers still offer this coverage. In these plans, the patient does not need a referral to visit a physician. The patient does have exposure because the insurer will only pay what they believe is the correct fee for service.
The patient is held liable for any difference. In these programs, the patient is not limited to a specific number of procedures, office visits or surgeries. However, each time the patient walks through a physician’s door or every time the patient enters the hospital, a fee will be charged. This system is phasing out because patients were subject to unregulated treatment. Duplicate x-rays, unnecessary blood draws and a host of other treatments left the patient and the insurer at risk.
Indemnity Plan
There are two types of fee-for-service health insurance; the indemnity plan and the reimbursement plan. With indemnity coverage, the insurer sets an amount that they will pay for the service. The physician can accept or reject the fee or the physician or hospital can explain to the patient how much they would have to pay out-of-pocket.
Reimbursement Coverage
With reimbursement coverage, the patient pays for all services personally. The patient then sends a receipt with the description of the service to the insurer who pays an amount that reflects the value of the provided service.
For the most part, fee-for-service insurance is becoming extinct because the patient has too much exposure to unforeseen repercussions. At today’s medical service charges, it doesn’t take long to accrue and unsustainable debt.
Managed Care
Almost all of today’s health insurance policies fall into the managed care category. These plans have similarities but are distinctly different. The biggest similarity is that the insurance provider reaches agreements with participating health centers, hospitals and physicians about rates it will pay for specific procedures or therapies. The patient can only use the providers approved by the plan. Both managed care options require the patient to pay deductibles.
At the center of the patient-insurance relationship under managed care program is the primary care physician. The primary care physician is an approved physician who accepts the managed care fees. The patient can choose the primary care physician, usually a general practitioner, from a list provided by the insurance carrier.
In most cases, the insurer relies upon the primary care physician to manage the patient’s care in a prudent financial manner. This doctor makes all as-needed appointments for the patient with other specialists.
Health Maintenance Organizations (HMO)
HMO’s are one of the two major health insurance plans for individuals. This is a managed care insurance that leaves no stone unturned. The policyholders and any named persons on the policy must use physicians, treatment centers, including hospitals or rehabilitation facilities that enter into a working relationship with the insurer.
All participating providers agree to receive an amount offered by the carrier plus the patient’s stated deductible as payment in full. With most HMO’s, the policyholder can choose from several important riders, including several prescription riders that have different levels of exposure for the policyholder and the insurance carrier.
The high price of the simplest prescriptions is a major consideration in all healthy insurance plans but it some form of coverage is a necessity. Obviously, the more exposure the carrier has, the more the prescription rider will cost.
The decision about prescription coverage is a tough one. It adds significantly to then overall price of the health plan, but most health conditions require medication. The cost of medication alone is one important reason to have health insurance.
With HMO health insurance, the policyholder builds his or her coverage by choosing a variety of options and from numerous deductibles. The more exposure the patient has, the less risk the patient has and thus the premiums are lower.
One of the important considerations of the HMO is an understanding of how the carrier treats “out-of-network” services. On occasion, the patient may need a service that cannot be performed by physicians in the HMO plan. One example is heart transplantation. Many HMO plans do not have working arrangements with transplant centers in their network.
Medical services in this “out-of-network” classification are called Carve Outs. Common carve outs are for mental health, substance abuse, dental coverage and transplantation. In these situations, the HMO enters into arrangements with out-of-network physicians and facilities that specialize in these treatments. The patient will still be responsible for all deductibles. Policyholders should understand that HMO’s have different deductibles for different services. While they may offer flat rate deductibles for office visits, the deductibles for in-patient services or emergency room visits can be substantially higher.
As mentioned earlier, HMO’s rely upon the use of a Primary Care Physician, often called the gatekeeper of the plan. All appointments for the patient must be arranged and cleared by the Primary Care Physician. In most cases, before a patient is referred to another specialist. the Primary Care Physician will insist upon a checkup for which the patient will pay the deductible. Most policyholders choose a general practitioner for adults and pediatricians for a child. The HMO will not pay for services unless the Primary Care Physician has referred the patient to a specialist.
There are different types of HMO plans. This makes it mandatory that the applicants discuss all HMO plans before selecting one. HMO’s can be Independent Practice Associations (IPA’s) and staff model HMO’s.
There is much to learn about HMO’s
Preferred Provider Organization (PPO)
In a PPO plan, the patient must select physicians and participating health centers that are in network or listed by Insurer. Once again, there may be situations where the patient is referred to out-of-network providers with whom the PPO plan has a working relationship. These centers are usually called “centers of excellence.”
All participating entities in the network offer agreed upon and discounted services to the patient who bears the responsibility of the deductible, which varies depending upon the selected plan and the necessary service. The top of the line PPO’s do not require a referral from a Primary Care Physician.
However, before going out-of-network, the PPO policyholder must get specific authorization from the insurance carrier. Otherwise the carrier will bear no expense. The cost of these out-of-network providers will be explained in the policy. In extreme situations, the policyholder should contact the insurance company to discuss all options.
The cost of the PPO insurance is influenced by the attached riders and number of persons covered under the policy. Married people without children may save money by purchasing two individual plans instead of a family plan. Typically, PPO coverage is more expensive than HMO insurance.
Point Of Service (POS)
From the applicant’s perspective, Point of Service health insurance gives the policyholder more flexibility by combining aspects with HMO characteristics with elements of the PPO.
For patients participating in POS insurance plans, some knowledge about medicine is necessary. The POS plan offers lists of network care centers, physicians and counselors.
Medicare Supplemental Plans
When Americans turn 65, they are eligible for Medicare Health Insurance. There are differing Medicare prescription plans. Medicare coverage can be upgraded once per year.
In general, Medicare pays participating physicians and health centers stated fees for specific services. The patient must verify that the physicians and center accept Medicare.
To lower the deductible, which can be 20 percent for seniors, many Medicare beneficiaries purchase Medicare Supplemental Insurance from private insurance companies. These insurance plans serve as secondary coverage. That means that after the primary carrier, Medicare, pays for services, the supplemental insurance carrier pays the balance less the policy’s stated deductible.
For all seniors, an important consideration is prescription coverage. Supplemental insurance plans offer a variety of prescription coverage. These prescription plans cover all prescriptions with a stated deductible. However, the policyholder is liable for the price of all medicines when the provider has paid up to $2,500 in prescription fees. At that point, the policyholder is responsible for the cost of all medicines up to $4,100. These figures may vary, but the principle remains the same.
The supplemental policyholder is liable for the gap or “window.” When the policyholder has paid up to $4,100, the insurer reverts to the same deductible agreement as before the “window.” While the gap exposes the policyholder to $1,900 in liabilities, there is a defined ceiling.
In addition to the cost of supplemental insurance, the policyholder must make monthly or quarterly payments to Medicare. Adding the $1,900 gap to the cost of the supplemental insurance and the cost of Medicare, health insurance to seniors represents a significant expense, but far less than the cost of Medicare without supplemental coverage.
Many states offer health insurance plans for the financially challenged. Every purchaser of private health insurance should check with the applicant’s state insurance department to discover what options might be available.
Very comprehensive article on personal health insurance. Tx for sharing.