Do you know everything you need to know about health insurance? Learn what types are available, what should be covered, how much it costs, deciding which plan is best and more…
Health insurance plans generally fall into one of two categories: indemnity plans (also known as reimbursement plans) and managed care plans such as health maintenance organizations (HMOs), preferred provider organizations (PPOs), and point of service (POS) plans. (Learn more about HMO, PPO, and POS plans.)
No matter which type of health insurance you buy, you'll need to make sure it offers the right kinds of coverage.
A good health insurance policy contains several types of coverage.
When comparing health insurance plans, check to see if they provide additional benefits that you may need, including:
In addition to the monthly premium expense, you may have other out-of-pocket costs. These costs can really add up, especially if you have children or other family members who visit the doctor frequently. Check to see if the health insurance plan you're considering requires you to pay any or all of the following:
You may get health insurance through a group plan at work or through another group affiliation (a school, a club, etc.) or by purchasing an individual plan on your own. By purchasing an individual plan, you may be able to customize the health plan.
A good way to compare rates, plans, and options for your individual needs is to shop online. Comparing online health insurance quotes helps to ensure you get your best rate.
The best health insurance plan for you is the one that gives you the greatest flexibility and the most benefits for the lowest cost. Unfortunately, there's no such thing as a standard health insurance plan. As you would when making any major purchase, you'll need to shop around and get several quotes before choosing a plan. Here are a few points to consider:
What is the difference between HMO, PPO and POS health insurance plans? Which is best for a small business?
Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Point-of-Service Plans (POS) are all types of managed health care. The purpose of managed care is to provide its members with access to a comprehensive system of medical care that offers savings and encourages quality service. While larger companies can afford to offer a choice of health plans, a smaller business can save money by comparing health insurance plans each year before the annual enrollment period. While cost is a key factor, make sure that the network you select provides convenience and coverage in your local area.
When your health care coverage is provided by a Health Maintenance Organization, you typically must select an HMO physician to be your primary health care provider. This doctor will coordinate all of your medical care, including referrals to specialists, such as a dermatologist, cardiologist or surgeon. If you choose to seek treatment from a non-network physician, you will generally be required to pay most of the cost yourself. By law, an HMO cannot require referrals for emergency care, so an HMO will pay for emergency room treatment without a referral.
Due to the restriction of choosing from mostly HMO network services, it's important to check the physician listing and hospital affiliations for the HMO you are considering. If the list is extensive and you are satisfied with the hospitals used by the HMO network, an HMO may be a good choice. On average, HMOs are the least expensive health option for employers and employees. Doctor's visits, preventive care, and medical treatment are covered by your monthly insurance premium, and there is no individual or family deductible to meet. There is generally a co-payment for each visit that varies based on the type of service provided and the plan you select, but typically no co-insurance. Most standard HMO plans do not have a lifetime maximum benefit amount. Some HMOs are starting to offer more choices in plan configuration, allowing their members to visit preferred providers outside of the network. This gives their members access to an HMO network and a PPO network at the same time, although the PPO portion usually involves deductibles and co-insurance.
A Preferred Provided Organization is more flexible than a traditional HMO insurance plan, but it still operates with a list of physicians and hospitals that are considered "within the PPO network." With a PPO plan, you may visit an out-of-network provider and still receive some coverage for their services. However, because the insurance company has not negotiated discounted rates with these providers, you will usually have to pay co-insurance or the difference between the network and out-of-network prices. The co-payment amounts for office visits and other services are also smaller if you see a doctor in the PPO network than if you see an out-of-network doctor. If you do choose to stray from your PPO network, you may need to pay for the treatment and submit the receipt to your PPO insurance provider for a partial reimbursement. Lastly, you do not need a referral if you wish to see a specialist, nor do you usually need to select a primary care physician.
Both plans may include a prescription drug benefit if you, as an employer, choose to offer one. You can decide what percentage of each prescription is covered by your HMO or PPO and what percentage the employee will be required to pay. The coverage price may range anywhere from a co-pay of $5 for some drugs, to a co-pay of almost the entire amount for others. Most plans also include a higher co-payment if the employee chooses a brand name drug over a generic formula, if one was available and recommended by the physician. Some HMO medical buildings have an in-house pharmacy, which may be an added convenience.
The POS plan is like a combination of the HMO and PPO plans. You are required to designate an in-network physician to be your primary health care provider. You may go out-of-network if you choose, but in doing so, you will have to pay most of the cost yourself, unless a primary care physician refers you to that specific doctor. In that instance, the health plan will pay all or most of your bill. Depending on the networks available in your area, a POS plan may be a great choice for your small business, if your employees work in multiple cities with different groups of doctors and hospitals available to them.
There are many choices for today's small businesses, and some health insurance companies give you the ability to offer more than one option to your employees. If you are interested in getting a health insurance plan for yourself or your business, Insurance.com helps you compare multiple rates from top health insurance providers.
Health care costs are on the rise, so now’s the time to evaluate how to lower your medical bills. Discover 10 easy ways to reduce health insurance costs today.
This may seem basic, but one of the most effective ways to lower your medical expenses over time is to maintain a healthy lifestyle. For example, you can:
If you don't have employer-sponsored health insurance, you may be ready to look for individual health insurance. Because premiums vary widely, you'll probably save money if you get quotes from several companies. Evaluate each plan's coverage and features, taking into account exclusions, limitations, and the freedom to choose health care providers, among other things. Also find out how much you'll end up paying out of pocket in the form of co-payments, coinsurance, and deductibles, because even relatively small amounts of money can really add up if you make frequent visits to your doctor. If you're healthy and just want protection for a major illness or accident, consider Catastrophic Health Insurance Coverage.
Try ordering your prescriptions through the mail, using a traditional or online pharmacy. If you belong to a prescription drug plan (e.g. through your health insurance), you may be able to get a three-month supply of your prescription drug through the mail for the same price you would pay for a one-month supply at your local pharmacy. You can also ask your pharmacist or doctor to recommend a less-expensive generic drug whenever possible. In addition, many groups and pharmacies offer prescription drug discount programs, although they usually offer small savings at best and large drawbacks at worst. Senior citizens and others on a limited budget may also apply directly to pharmaceutical companies for prescription assistance.
Check every itemized statement your receive from a hospital or physician to make sure that the bill accurately reflects the treatment you received and applies all available insurance coverage. Some errors, such as incorrect computer codes, are common, and you may be billed for health care you never received. Contact the billing office if you think you've found a mistake. If you've received an explanation of benefits from your insurance company that you believe is wrong, ask the company to review your claim.
Many married couples maintain separate health insurance coverage even though it may not be cost effective to do so. Examine both your coverage and your spouse's coverage to see if it makes sense for either of you to join the other's plan. Keep in mind that most plans allow you to add a spouse to your plan within a certain period after you get married (e.g. 30 days). Otherwise, you may have to wait for the plan's annual open enrollment period.
Come tax time, you may be able to deduct certain medical expenses. The current IRS rules specify that you must itemize your deductions, and your total medical expenses must exceed 7.5% of your adjusted gross income. Allowable medical expenses include everything from health care services to medical aids (e.g. eyeglasses, hearing aids). And, don't wait until the end of the year to track these expenses, if there's a chance you'll be able to deduct them on your income tax return.
Health care providers sometimes offer wellness incentives to their customers. These can include regularly attending a gym, pledging not to smoke, and preventive care programs. Many health insurance companies will give an annual or monthly discount if you simply get a physical once a year and have a doctor certify that you're receiving proper preventive care.
Your employer may offer a tax-favored health plan such as a flexible spending arrangement or health savings account (HSA) that allows you to put pretax dollars in an account. You can then use these funds to pay for or reimburse your out-of-pocket medical expenses, such as prescription drugs, dental care, and co-payments. Because these contributions are taken out of your pay before federal and state taxes are calculated, you get to use pretax dollars to pay your medical bills. In some cases, these accounts can provide an investment savings option as well.
If your health insurance doesn't provide adequate coverage in some areas, or if you don't have any health insurance coverage at all, you may want to look into free health screenings. Local clinics and hospitals often provide a variety of screenings, such as blood pressure, cholesterol, and mammograms. You may also find free flu shots and well-child check-ups at government offices or your local WIC program.
Your health insurance may cover more than you think. Insurance companies often provide benefits designed to help you stay safe and healthy. For example, you may receive discounts on vitamins, alternative medicines, health club memberships, exercise equipment, and bike helmets.
You may also be surprised at the range of coverage your health plan offers. For instance, it may cover dental care for young children, chiropractic care, and acupuncture. Read your plan membership materials to find out what products and services are available through your health plan before you pay for them on your own.
Here are the frightening facts: the past three years have seen double-digit increases in group health insurance premiums.
As a business owner, if you think this is good cause to panic, you’re not alone. The rising cost of providing health insurance for employees is regularly cited as the number one concern of smaller companies today. Employers know how highly their workers value medical coverage, but many feel that they’ve been pushed to the wall and are now facing a fatal dilemma: pass the crippling rate hikes on to their employees, or cut benefits entirely.
The truth is that you don’t have to settle for one of two equally bad choices. If you currently have a health plan that’s straining your budget or have no health plan but would like to offer one for your employees, here are three tips to help you find a quality group health insurance plan at a reasonable rate:
Compare quotes and benefits from multiple insurance companies.
You wouldn’t buy a car without first familiarizing yourself with the different makes and models available. Similarly, when shopping for group health coverage, don’t limit yourself to the offerings of a single insurance company. The most convenient way to get an overview of the insurance options in your area is by working with an online agent. A licensed group health insurance agent can provide you with the benefits and rates from a large number of insurance companies and plans. With more to choose from, an agent will help you match your business to the best plan and save you money by making sure you’re not paying for “extras” that you and your employees don’t need. Make sure that any agent you work with, on or offline, is licensed in your state.
Consider a high-deductible plan.
Another way to save is by opting for a high-deductible plan. If your employees are healthy and don’t make frequent visits to the doctor, this may be a good option for you. You can save money and still retain valuable coverage for your employees through a high-deductible plan. Though they will face deductibles before coverage kicks in, your employees will be protected from the catastrophic consequences of having no coverage in the event of serious illness or injury. Your licensed agent can provide you with information on high-deductible plans in your area and help you determine if such a plan makes sense for your business.
Take advantage of available tax incentives.
Educate yourself on the tax benefits available to you as a business owner when you provide group health insurance for your employees. You may be able to fully deduct the premiums paid on your group health plan, and offering coverage as part of a total compensation package may reduce your payroll tax. Health Savings Accounts (HSAs) provide another important tax break for you and your employees. These tax-favored accounts can be used in conjunction with certain high-deductible plans and your contributions to them are exempt from payroll tax. Talk to your agent about HSAs and HSA-eligible plans. All these incentives contribute to the affordability of your group health insurance plan.
The older you get, the more likely your chances are of requiring some type of long-term care assistance. And because you know that the cost of even just a few
For the most part, deciding when to purchase LTCI will depend on your age and your ability to pay the premiums. Since premiums are based on your age at the time you purchase the policy, the younger you are when you purchase LTCI, the less expensive your premiums will be. However, there's a tradeoff. If you purchase LTCI early, you may be paying premiums over a long time period.
So, just when is the right time to buy an LTCI policy? Although insurance companies will write an LTCI policy for anyone between the ages of 40 and 84, most people purchase LTCI when they reach their 50s or 60s. That way, they won't end up paying significantly higher premiums because they waited too long to purchase a policy.
Should you purchase an LTCI policy?
Deciding whether you should purchase an LTCI policy depends on your individual circumstances. However, you may want to consider purchasing an LTCI policy if some of the following criteria apply:
Typically, people buy property and casualty insurance to protect their possessions (houses, cars, and furniture) and life insurance to provide income for their
A look at the odds
Statistically, your risk of being disabled is great. In a given year, the following events occur with the following frequency:
| Event | Frequency |
| Home fire | 1 out of every 88 homes |
| Serious auto accident | 1 out of every 70 autos |
| Death | 1 out of every 106 people |
| Disability | 1 out of every 8 people |
A further look at disability statistics reveals the following:
As these statistics show, your chances of being disabled for longer than three months are much greater than your chances of dying prematurely. One reason for this is that medicine has found ways of treating many illnesses and injuries that previously would have been fatal. Although this is good news, it increases your need to protect your income with disability insurance.
Of course, statistics can be misleading. You might never become disabled, especially if you're healthy and work in a low-risk occupation. But then again, how many people do you know who have had cancer or have suffered a heart attack? How many of your friends and family members have been in car accidents or have had back problems? Illness, as well as injury, is disabling. If you were hurt or got sick, how would you support yourself or your family?
What would happen if you became disabled?
What would happen if you suffered an injury or illness and couldn't work for days, months, or even years? If you're single, you may have no other means of support. If you're married, you may be able to rely on your spouse for income, but you probably also have many financial obligations, such as supporting your children and paying your mortgage. Could your spouse really support you and your family? In addition, remember that you don't have to be working in a hazardous occupation to need disability insurance; accidents happen not only on the job but also at home, and illness can strike anyone. For these reasons, everyone who works and earns a living should consider purchasing disability insurance.
But isn't disability coverage through an employer or the government enough?
You might think that you are adequately insured against disability because you have coverage through your employer or through government programs such as Social Security and workers' compensation. However, only 50 percent of employers cover short-term disability, and only 40 percent cover long-term disability. Government programs may pay you benefits, but only if you meet a strict definition of disability. Here's an idea of the benefits you may already have, as well as their limitations:
As a result of the new healthcare reform law, the health insurance industry must now comply with a number of new requirements that will affect nearly every American. Those include:
By September 2010, health plans cannot deny coverage to children based on pre-existing conditions. Beginning in 2014, all pre-existing condition exclusions will be prohibited.
By September 2010, all health plans must permit children to stay on family policies until age 26, unless the adult child (married or unmarried) has an offer of coverage through his or her employer. Beginning in 2014, parents can keep children up to age 26 on their plan, even if dependents have access to employer-based coverage.
In September 2010, insurers will be prohibited from placing lifetime limits on what they will pay for your medical care, and they can only apply restricted annual benefit limits.
Insurers will no longer be able to arbitrarily cancel your insurance policy when you get sick.
By September 2010, health plans must provide coverage for preventive services. Recommended prevention and vaccination services will be covered without any deductibles or co-payments.
Starting in plan year 2011, insurance companies must disclose requested premium increases publicly. If the rate increase is found to be unreasonable, the insurer may be prohibited from competing for business in the new state-based exchange system that begins in 2014.
Beginning on Jan. 1, 2011, health plans will be required to spend most of their premium dollars on consumer care – rather than on profits and overhead – and rebate any excessive overhead to enrollees.
The sweeping new healthcare reform bill signed into law on March 23 mandates changes in coverage, care and costs.
In terms of coverage:
Have you ever returned from a medical facility or a hospital stay only to receive several confusing statements of charges billed to your insurance company weeks later?
You're not alone.
First the bill for your stay or office visit and physician exam, then a separate one for X-rays, another for a blood test, and yet another bill for a service you didn’t even know you had. And not only does it create busy work for you to figure out what it all means, write out various checks and mail them, it also results in millions of dollars in wasted government income each year.
With the new healthcare plan signed into law recently, doctors and hospitals will begin to “bundle” payments for Medicare patients, billing for an episode of care rather than charging separately for each procedure or treatment. This not only reduces unnecessary costs and saves you time, it’ll encourage physicians to be more efficient and ultimately will improve the continuity of your overall care. It will also discourage unnecessary tests and lengthy hospital stays.
Bundling payments means the hospital or medical facility and its physicians share the payment for each episode of care, reducing the cost to a fixed amount and creating an opportunity to better coordinate your treatment. Enhancing the quality of care for patients will reduce total healthcare costs in the long run and keep you healthier.
Before President Barack Obama's healthcare overhaul was signed into law on March 23, 2010, Medicare was projected to be sustained through 2017. The new plan promises to strengthen Medicare, extending it another 12 years to 2029. Designed to make Medicare more efficient, the plan aims to cut away wasteful overspending generated by excessive administrative costs, billing separately for services covering an episode of care, and generous payments made to private plans.
Government-subsidized private plans like Medicare Advantage receive an average of 9 percent more than standard Medicare rates, allowing most private plans to offer lower deductibles and co-payments and extra benefits such as gym memberships and vision and dental care.
With a reduction in government payments to Advantage plans – an estimated $136 billion over the next decade – starting in 2011, some predict that seniors who are highly dependent on their extra benefits may experience a disruption in services. It could also threaten the enrollment of private Medicare Advantage plans, or cause some of its 11 million members to seek traditional Medicare health insurance.
Cutbacks in government payments to private plans will better align them with Medicare, but will not prevent insurance companies from offering their own Advantage plans. It will, however, challenge insurers to enhance their customer service and wellness programs for people with chronic conditions in order to earn the bonus payments made to plans scoring four stars or better on the government's rating system.
The real bonus is that in 2011 the new plan also eliminates deductibles and co-payments, and provides free annual wellness check-ups for seniors.
The uninsured are among the biggest winners of the new healthcare reform law, which mandates coverage for as many as 32 million people who are currently uninsured, either because health plans consider them too sick to insure or because they cannot afford to pay rising premiums.
The approach to insuring the uninsured will be incremental.
Consumers will have more opportunities to take control of their health insurance choices when the Department of Health and Human Services goes live on July 1 with a website where individuals can identify affordable health insurance coverage options in their home states. This will help consumers choose the plan that is best for them.
Beginning within six months of March 23 (when President Barack Obama signed the legislation into law), health plans will be prohibited from denying coverage to children based on pre-existing conditions. Starting in 2014, all pre-existing condition exclusions will be prohibited. Consumers who are currently uninsured because of a pre-existing condition will be able to purchase affordable insurance through a temporary, subsidized high-risk pool. This program will cease in 2014 when consumers will be able to purchase insurance through state-based health exchanges if their employer does not provide coverage or they earn too much to qualify for Medicaid.
Tax credits aimed at helping subsidize health insurance premiums will apply to individuals earning less than $44,000 and families earning less than $88,000.
Also beginning in 2014, individuals with an income below 133 percent of the poverty level (about $29,327 in 2009 for a family of four) will be eligible for Medicaid.
In addition to creating state-level health insurance agencies, the new health reform law includes a series of authorities and responsibilities for the Department of Health and Human Services (HHS). Specifically, the Secretary has the authority to:
HHS will also conduct regular, national worksite surveys to assess employer-based policies and programs and report to Congress and the public with recommendations on how to improve them.
Starting in 2014, the U.S. Department of Treasury (IRS) will function as the government's chief enforcer for healthcare reform, monitoring both businesses and individuals to certify that they have the insurance coverage the government requires.
In the eyes of the federal government, a small business is a company with fewer than 100 employees. But some states define a small business differently, so it’s best to check.
Under the new healthcare law, the smallest companies with 10 or fewer full-time employees earning less than an average of $25,000 per year are eligible for the largest tax credits – 35 percent of the insurance premiums paid as of January 1, 2010, and 50 percent in 2014 (small nonprofits are eligible for 25 percent now and 35 percent in 2014). The amount of tax credit steadily decreases as the size and wages of the company increase up to 25 employees earning an average of $50,000 per year.
In fact, there are no tax credits available for firms with more than 25 employees or for any employee who earns more than $80,000 per year regardless of the company’s size. And part-time workers will be aggregated when calculating the number of employees (i.e. a company with 50 half-time workers will be viewed as having 25 full-time employees).
The tax credit program is available to small companies that already provide employee insurance as well as to those that start. However, beginning in 2014, businesses with more than 50 employees will be required to either offer healthcare coverage or pay an “assessment” of $2,000 per year per full-time worker not covered (although they won’t charge for the first 30 uncovered employees). Health insurance programs will also have to meet some minimum requirements – i.e. covering certain services and at least 60 percent of employee overall costs – or the company will face additional penalties.
Beginning in 2014, small businesses can apply for grant money to implement comprehensive workplace wellness programs through a $200 billion, five-year federal program designed to address underlying poor health habits and promote disease prevention through:
Grant money can be used to set up employee screenings and assessments; mechanisms to encourage employee participation; initiatives to change unhealthy behaviors and lifestyle choices with counseling, seminars and online programs; and workplace environment policies that encourage healthier lifestyles.
Employers will be able to offer increased incentives to employees for participation in a wellness program like lunchtime walking or smoking cessation groups, or for meeting certain health-status targets. Premium discounts of up to 30 percent of the cost of coverage will also be available. Existing wellness regulations max out at 20 percent of the total premium.
In addition, a national public education plan will focus on the importance of community and worksite wellness and health-promotion programs. And companies of any size will have access to government web portals, call centers and other tools to increase employee participation; develop standardized measures of a program’s impact on employee health and healthcare expenditures; and create evaluation tools to measure changes in productivity, absenteeism, changes in employees’ health status, and medical costs incurred over the course of a specified time period.
In addition to immediate tax credits available to small companies, state-based Small Business Health Options Program (SHOP) Exchanges will be available by 2014. SHOP Exchanges pool small businesses and their employees to give them better purchasing power and more affordable premiums.
The Exchanges will also provide web portals with easy-to-understand information for simple comparison of prices, benefits and the quality of various plans and other information specifically for small businesses regarding affordable healthcare options.
Small businesses that grow beyond the upper employee limit of a SHOP Exchange will be permitted to continue to purchase insurance through the Exchange – and states will have the flexibility to allow companies with more than 100 employees to purchase coverage through a SHOP Exchange beginning in 2017.
So-called "Cadillac" plans costing more than $10,200 per year for individuals or $27,500 per year for family coverage (not counting dental and vision plans) will be subject to a 40 percent tax on the portion of the cost that exceeds that limit.
Conversely, companies will be required to cover no less than 72.5 percent of the cheapest health plan for individuals, and no less than 65 percent for families (unless they opt out) or pay the Health Choices Commissioner who administers the state SHOP Exchange fund 8 percent of the average wages paid during a predefined period of enrollment (a lower percentage will be assessed for payrolls less than $400,000).
Companies will be fined if they don’t cover employees and don’t pay the SHOP fee or try to entice a high-risk (sick) employee away from company-provided insurance and toward the SHOP to try to save money.
Effective January 1, 2010
Effective 90 Days After Enactment (June 2010)
Effective Six Months After Enactment (September 2010)
Effective January 1, 2011
Effective January 1, 2013
Effective January 1, 2014
Health-insurance exchanges will be created at the state level. Initially, these exchanges will be open to individuals and small employers with 100 (or possibly 50) or fewer employees.
