Health Insurance Terms You Should Know

Health Insurance TermsWhen looking at a health insurance plan or accompanying paperwork, whether it’s part of an employer provided group plan or an individual plan, you need to know exactly what you’re reading.  Here is a few of the most important terms that you should understand about health insurance. It is by no means an exhaustive list, but should help to get you started when shopping around for health insurance.

Co-insurance – This is the amount that is considered the insured person’s responsibility.  On average, the split between a person’s co-insurance responsibility and the company contribution is 80/20; meaning that you pay 20 percent of your health insurance premium and your employer pays 80 percent.

Coordination of Benefits – If the insured has two or more sources that would pay for a certain condition or treatment (such as being covered by a spouse’s insurance plan along with your own) the insurance company would not pay double benefits. Instead, they would coordinate benefits to make sure that each plan pays their portion for the service or treatment.

Co-payment – The fixed amount that the insured is required to pay at the time of service. A co-payment is usually required for basic doctor’s visits and when purchasing prescription medications. The amount can range depending on which play you subscribe to and your premium payment level. Many group plans like those provided by your employer will have payments of around $15-$20 for doctor visits and prescription drugs.

Deductible – Deductible refers to the amount of money that the insured needs to pay before any benefits from the health insurance policy can be used. This amount is generally a yearly figure that resets at the beginning of the next year. Some services such as doctor visits may be available without meeting the deductible amount first. Usually there are separate amounts for individual deductibles as well as family deductibles.

Exclusions – Exclusions are the things that an insurance policy will not cover.

Grace Period – This is the amount of time a person has to pay for their health insurance premiums before their coverage is cancelled. This is important if your state or insurance company rules require that you not have any gaps in your coverage, and especially important if you do not want to lose your coverage because of non-payment.

Lifetime Maximum – This is the most amount of money a health insurance policy will pay for the entire life term of the policy. There are different individual lifetime maximums and family lifetime maximums, so pay attention to both amounts.

Out-of-Pocket – This is exactly what it sounds like: The amount of money the insured pays out of their own pocket. The term may be used to refer to how much the co-payment, coinsurance, or deductible amounts are. The term annual out-of-pocket maximum refers to how much the insured would have to pay for the whole year out of their pocket not including premiums.

Pre-existing Conditions – This term refers to health conditions, ailments, or situations that exist before an individual obtains a health insurance policy. Group plans do not prejudice based on pre-existing conditions, but individual health plans generally require that health questionnaires be filled out and a medical exam to test for pre-existing conditions be completed before an individual applies for coverage. Individual plans will often deny or limit coverage based on the results of their findings, especially in the case of pre-existing conditions. This is a major difference between group and individual health insurance plans.

Waiting Period – This is the amount of time a person must wait until health insurance coverage becomes available or they are eligible.

For more information on individual health insurance please visit Premier Insurance Services of Chicago for a free Chicago health insurance quote.

What to look for when shopping for individual health insurance

Health Insurance

If you’re frustrated with the amount of money being deducted by your employer from your paycheck each month for health insurance, you may have considered going out on your own and buying your own individual health insurance at one point or another. Or perhaps your employer has hit upon hard times and decided that they can no longer provide you with health insurance. In either case, you might want to crunch some numbers and see if buying your own health coverage is a smart, money saving option.

Doing Your Homework

Some people may not even realize how good they have it until they leave their job and try to buy their own insurance. In most cases, they can’t afford to purchase comparable coverage on their own. That’s because large businesses and corporations benefit from buying in bulk and try to pass that benefit on to their employees. That’s why they call it a benefit. Employers are trying to use their benefit package to attract and keep good employees.

There’s also no guarantee that you will be accepted for an individual policy. Individual plans are more restrictive and pre-existing conditions may exclude you from consideration of coverage by some individual health insurance companies. Do your homework, though. Some states have “guaranteed issue” laws that require health insurers to offer you a policy regardless of which medical problems or background you have. Check your local laws and regulations before you decide to make the jump. Individual insurance providers may also increase your rates over time as you age, so take that into consideration as well.

Think Price

Price is probably the main reason you want to shop around for your own coverage, so you should know ahead of time that you can shop for bargains on premiums, which can sometimes vary by as much as 50 percent for the same person with the same health background and age, depending on which company you are getting a quote from.

Don’t fall into the belief that you’re healthy and can save all of your money by foregoing coverage completely, either. All it takes is a one serious accident to put you into “medical bankruptcy.” You can also lose your rights to coverage of pre-existing conditions if you go without insurance for 63 days or more, a time period set by the Health Insurance Portability and Accountability Act (HIPAA).

Here’s a list of questions to ask when shopping for individual health insurance:

  1. Do you want to keep your doctor? – Finding a good doctor whom you enjoy working with is important. That’s why you want to make sure that you can keep your doctor when you switch from your employer provided plan to your own individual provider.
  2. What are your anticipated health care needs? – Think of the services you use regularly. Do you need optical, dental, chiropractic? Do you or members of your family need some type of special, regular care for a particular health condition? Will you be covering your children or a dependant parent? Will your needs increase over the next few years, in turn increasing your premiums or costs?
  3. What can you afford? – You’ll need to figure out two different average yearly costs for your healthcare. One is the premium, and the other is your out of pocket costs. Each one can affect the other. A higher premium may lower your out of pocket expenses and vice versa. You’ll need to figure out what will fit within your budget. You’ll also need to figure out if the amount you’ll pay will end up being less than the amount your employer is currently deducting from your paycheck.

It’s incredibly important to find out all of the specifics for any health insurance plan you’re looking at. Here are some key areas to look at:

  • See if the plan covers prescriptions and x-rays. Prescriptions are the most often used part of a health plan. X-rays are routine parts of many treatments and can become expensive if not covered.
  • Make sure specialists are covered if you use them. This includes alternative medicine such as acupuncture or other specialties such as chiropractors and psychotherapists.
  • Find a comprehensive plan that covers more even if the deductible is higher. You might be able to find a cheaper plan than your employer offers, but don’t sacrifice key coverage such as hospital stays, which can get pricey.
  • Ask what the costs are for emergency care. This includes co-pays and deductibles. Also be sure to read the fine print on what your provider defines as “emergency care” as these definitions can and do vary from one provider to another.

This is by no means an exhaustive list of considerations to look at or questions to ask. Do your own homework and research all of your options carefully. Make sure that any “deal” you are offered is really worth gambling your family’s health on. If you are a careful shopper, you might be able to put a little extra money in your pocket each month.

For more information on individual health insurance please visit Premier Insurance Services of Chicago for a free Chicago health insurance quote.


Is Private Health Insurance Right for You?

Health  CareThe greatest benefit of working in just about any professional position is health insurance. Depending on the type of coverage your employer provides, this benefit can account for a quarter or more of your total compensation package when you consider your job’s pay, vacation and other benefits. This makes health insurance second only to salary when considering the overall value of the work you output. That’s why when job searchers are weighing different offers from similar employers, health benefits can make the difference whether or not they accept a position, and why health insurance is such a hot topic in nations such as the U.S. that have not adopted a government sponsored socialized medicine program like so many other nations have.

There is another health insurance option for Americans, however. As more companies have found it necessary to shift the costs of health insurance to their employees to help with their bottom lines, more workers are finding that they can seek to opt out of their employer provided insurance and strike out on their own by buying private individual coverage instead. For years this was a difficult prospect for most people as it was far too expensive to make it worthwhile. In recent years, however, individual insurance providers are finding that more people want to use their services and have adjusted their rates to make this a far more affordable option.

According to a Kaiser Family Foundation report, employer-sponsored health-care costs have risen between six and nine percent yearly over the last few years. Contrast that to what employers pay, on average, which equals about $3,785 a year for single-person coverage and $8,824 for family coverage. In turn, they pass 16% of that premium on average to their individual employees and 28% of it to families. Smaller employers, who cannot foot as much of the bill as large corporations, often charge their employees less for single coverage and more for family coverage. The situation is expected to get worse, as 40% of large employers say they are “very likely” to require more contributions from their employees for health care in coming years.

So is it worth your while to dump your company plan in favor of individual insurance coverage? The answer is: Not so fast. It’s incredibly important to get a clear value of your existing coverage from your employer or Human Resources department first along with a good estimate of how much is being deducted from your paycheck each week to cover these costs. With that information in hand, you can do some hunting for individual insurance with a realistic idea of how much money you can save (or lose) by dumping your work insurance.

Here are some of the pros of making the switch to individual insurance:

Keep more money in your pocket – It is possible for healthy families to find competitively priced insurance coverage on the open market. According to the website, the average individual insurance premium for a single person in California, for example, is just $139 a month, while family coverage costs $357 a month. In most cases, these individuals would pay several hundred dollars more per month through their employers.

Pay for only what you need – With many employer provided plans you don’t have a lot of choices or options. On the private market you have more of an ability to choose the coverage you need and ignore the coverage you don’t.  Paying for only what you need can save hundreds of dollars per month.

Take your coverage with you – When you buy your own insurance you won’t be subject to the volatility of changing jobs or layoffs. If you change jobs often, you have to take the gamble that comes with gaps in your coverage either.  There are no coverage gaps if you buy your own insurance. You also won’t feel like you have to stay at a dead end job just to keep your good health benefits.

There are some definite negatives you should be aware of as well:

Less coverage – Dollar for dollar, employer plans provide more coverage than individual plans. On the individual market you may pay less, but you’ll usually get less. Employer subsidies definitely work in your favor in a lot of cases.

Stricter rules – You could be out of luck with private insurance if you have a pre-existing condition. Employer plans must insure everyone in their plan, but individual plans can reject you for many different reasons.

Rates can increase – Premiums for individual insurance can rise with age, so you may be saving money by buying an individual plan now, but farther down the road you may wish that you stayed with your company provided insurance.

After heeding all of this advice, if you do decide to forego your employer’s health insurance plan, be sure that you have secured an individual policy first. The worst thing you can do is lose your coverage and have to wait until your company’s next enrollment period to get back in. Be smart and do your homework. Crunch the numbers and make sure that individual insurance is right for you. If done right, you could save a lot of money.

For more information on individual health insurance please visit Premier Insurance Services of Chicago for a free Chicago health insurance quote.