is a contract and it requires your health insurer to pay some or all of your health care
costs in exchange for a premium. The different types of Health Insurance are: major medical,
short term medical, supplemental, long term care, Medicare, Medicaid and Medicare Supplement.
Health insurance covers your medical and surgical expenses. There are two main types of health insurance: private and public (government) health insurance. Private health insurance is usually what people think of through their employers or other organizations. Private health insurance also includes individually-purchased plans not through an employer or the government and may cost more, because the insured is not sharing the cost with an employer.
In March of 2010 the Affordable Care Act (“ACA”) was signed into law. The key tenets of the ACA are:
· Guaranteed issue health insurance
· Elimination of Pre-existing Condition Limitations
· First-dollar preventive healthcare
· Federal subsidies for low-income individuals
· Individuals can stay on their parents’ policy until age 26
· Minimum standards for Qualified Health Plans
· Tax penalties for most individuals who do not have health insurance
ACA compliant plans
are run by private insurance companies and follow the requirements outlined in the ACA. These plans are HMOs and may include an HSA option. The cost of an ACA compliant plan will depend on your income, family size, and zip code. Not all plans are available in every county.
Health Maintenance Organizations
(HMOs) pay for medical care only within their network of healthcare providers. HMOs usually cost less than plans with a broader network of facilities and providers. HMOs may contain copayments, or copays, where you will make a structured payment for a service. An example, you visit the doctor's office and have a co-pay of $50. You pay the $50 instead of the reasonable and customary charge for the actual visit.
Preferred Provider Organizations
(PPOs) cover more medical costs if you receive care within their network of doctors and/or facilities. You are still responsible for some costs if care is received outside of the PPO network.
Point of Service
(POS) plans allow you to choose between an HMO and PPO each time you receive medical care and they offer more flexibility for you to choose your doctors and facilities.
are different than managed care. Your choice of providers and facilities is not restricted to a specific network. You pay a doctor and/or facility everytime you receive medical care covered by the plan. The doctor, facility, or you submit a claim for reimbursement to the health insurance company. Your out-of-pocket costs could be higher than a managed care plan. Indemnity plans typically pay for 80% of the usual and customary medical and surgical services, you will then be responsible for the remaining amount as well as any excess charges.
is the amount of covered expenses you must pay before the insurance reimbursement starts covering medical costs. The out-of-pocket maximum is the amount of expenses you are liable to cover within a 12-month period. Everything not considered excessive or a noncovered expense, over the out-of-pocket maximum will be covered by the insurance. The lifetime limit is the amount of expense the insurance company will cover over the insured’s lifetime. ACA compliant plans do not have a lifetime limit.
Health Savings Accounts
(HSAs) are tax-free savings accounts to build coverage for future medical expenses. Only individuals with a high-deductible plans are eligible for HSAs. These are useful for people who want protection and do not have any/many ongoing medical costs, and want to be ready for an emergency or catastrophic healthcare expense.
Remember Insurance Companies want to manage risks in one of four ways. They are: · Avoid Risk - Decline / Control Risk - Waiver and Rate-Ups / Accept Risk - Standard Issue / Transfer Risk - Reinsure
Health Share Programs
Are faith-based programs (with options for different religious denominations) which coordinate voluntary sharing among members for eligible medical expenses. Members send in monthly ‘shares’ (i.e., premiums) which are distributed to or on behalf of other members with medical expenses (i.e., benefits payments) in accordance with program guidelines. THe idea is that people with similar beliefs and values come together to share each other’s burdens.
There are some key features of health insurance which healthcare sharing programs lack, including:
Insurance can be defined as “a practice or arrangement by which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium.” All healthcare sharing program disclaimers have no such guarantee. Insurance is a legally binding contract between an insurer and the insured. Everything in a health share program is ‘voluntary’, and there is no actual binding contract between a member and the program stating that you will receive payment for a submitted expense.
Health sharing programs are not for everyone, but for some they can be the best option to help cover those unexpected health care challenges. The monthly premiums (shares) are often far less than those of an ACA compliant plan.