Health Insurance 101

What Is Health Insurance?

Health insurance is a mechanism in which you can manage your health care costs. Basically, you pay health care companies, premiums (a set amount each month) and you get benefits to pay for your eligible health care expenses. Your plan could also have a deductible, which is a set amount that you have to pay for covered services, before your insurance plan foots the bill.

A co-payment or co-insurance, is a set amount that you pay for covered services, usually after a deductible is met. For instance, you may have a set co-pay of $200 for an emergency room visit or a 70/30 co-insurance for advanced imaging, where you cover 30% of the costs, and the other 70% is from your insurance carrier. In general, the more you pay per month (premium), the lower your deductibles and out-of-pocket costs. You will also notice your plan will have an out-of-pocket maximum, which means that after your total health care costs in a calendar year reach this amount, the health insurance carrier will now be footing the rest of the bills, until the new plan year starts.

You usually will also have prescription drug coverage built in to your plan, in which you may have to meet a deductible first, and then have set co-pays or co-insurances for each tier or level of drugs in your plan’s formulary. Keep in mind, generic drugs are usually going to be more in-expensive than brand-name drugs. For example, when at the local Walgreens, you may notice that the Tylenol brand is more expensive than the Walgreens brand of the same drug. Same ingredients, but lower price. This is essentially how it works with prescription drugs.

What is The Affordable Care Act (Obamacare)?

The Affordable Care Act, also known as “Obamacare”, is a federal law that requires most everyone to have health insurance. This can be done in a multitude of ways, from obtaining coverage from an employer, buying directly from an insurance carrier, or signing up for coverage on the government-run exchange, known as the Health Insurance Marketplace. If someone does not obtain such coverage, then a tax penalty could be awaiting you around tax time. An important feature of this legislation, is that is does not allow insurers to deny coverage based on a health condition you had before getting on a plan, known as a “preexisting condition”, and you can’t be charged more because of it. For more on the nitty gritty details on The Affordable Care Act, click here. Something to keep in mind is that plans under The Affordable Care Act, are not required to cover vision and dental for adults, but if someone is under 18 years old wanting coverage, these could be offered. If you are needing to get either dental or vision coverage, we are more than happy to help you.

Why Should I Buy Health Insurance?

Literally everyone should buy health insurance because it is mandatory, unless you qualify for a hardship exemption. One thing that may come to mind naturally is that it may make more sense to take the tax hit than to buy an expensive policy, that you may not think you need. First, keep in mind that health insurance can be less expensive than the tax penalty you face if you don’t have health insurance. Secondly, the amount you would have to pay out-of-pocket for a medical emergency if you do not have health insurance is much higher than the tax penalty. In fact, medical bills are a leading cause of consumer debt and related financial problems. Data from 2009 shows this number to be around 60%, quite frightening to say the least. For a real world example, consider this. An uninsured with appendicitis might pay nearly $40,000, while an insured one with the same condition, could pay as little as $1,500.

What If I Have A Family?

If you have children, it is quite likely that they may need to visit the doctor or urgent care more frequently than a relatively healthy adult. One thing you want to ensure, is that your deductibles, co payments, and coinsurance are affordable for you. Keep in mind also that your plan may have a family deductible in addition to individual deductibles for each family member. Individual deductibles are often times lower than a family deducible. Once an individual will hit their individual deductible, their health insurance plan kicks in just for them. On the flip side, when a family deductible is met, health insurance will kick in for every member of the family, regardless of whether or not an individual has reached their deductible.

What If I Am A Student?

You can stay on your parents health plan until you are 26 years old, so no need to buy health insurance if your parents are willing to let you stay on their plan. A good option is also to check your local university for any health insurance plans they may offer, which in some cases, can be quite affordable. Keep this in mind especially if you are attending a college or university out of state, as your parents plan network may not be usable in that state.

What If I Am Self-Employed?

If you just became self-employed after leaving a full-time W2 job, an option would be to use COBRA to continue your previous employers coverage until you are able to find a new plan. If it is not an open enrollment, you should also be able to qualify for a Special Enrollment Period to shop on the marketplace. Ensure that your premiums are affordable, as your monthly income may be variable. Your health insurance premiums are also tax deductible, so keep that in mind around tax time. Additionally, if you travel frequently for work, you might want to consider a plan that allows you to see out of network providers, like a PPO.

What If I Have A Low Income? 

If you are on a low income or tight budget, you should check to see if you qualify for Medicaid. Medicaid is a public health insurance plan available for low income individuals and families. If your income is between 100% and 400% of the federal poverty line, you may likely qualify for a subsidy from the health insurance marketplace. This subsidy can make your health coverage more affordable. The most important thing to keep in mind is to have some sort of coverage in place. A serious health issue can turn into a financial disaster if you’re not careful. If you qualify, look into catastrophic plans as these plans can protect you from the cost of serious illnesses and accidents.

What If I Am A Veteran?

If you are a veteran, you may qualify for health care through the U.S. Department of Veterans Affairs (VA). The Affordable Care Act does not change VA health benefits. If you qualify for VA health benefits, you do not need to purchase an additional health insurance plan to meet the Affordable Care Act’s health insurance mandate. If you have health insurance coverage thorough a private-sector employer, you can have and use both health insurance plans at the same time.

What If I Am Pregnant? 

All health insurance plans that count as qualifying health insurance cover pregnancy and childbirth related services. Maternity care and childbirth are one of the ten essential benefits required on qualifying health plans under the ACA. These services are covered even if you became pregnant before your coverage starts. Having a child also counts as a qualifying event for a Special Enrollment Period in which you can enroll in a new plan or switch plans. Maternity care and childbirth are also covered by Medicaid and CHIP. If you qualify for Medicaid and CHIP and are pregnant, you can apply at any time during the year through your state agency or marketplace.

What If I Am A Senior Citizen?

If you are above the age of 65, you likely qualify for Medicare. Medicare is a federal program designed to help you cover healthcare costs into your old age. You can also purchase supplemental insurance, called Medigap, that can help pay for your deductibles, copayments and coinsurance. Check out the “Medicare Solutions” page on our site above, for more options if you fit in this category.

What If I Am Currently In The Military?

If you are an active duty service member, your healthcare (and your family’s health care) is covered by TRICARE. You do not need to purchase additional health insurance to comply with the ACA.

What If Am Married But Do Not Have Kids? 

If you are married but don’t have kids, you don’t need to buy health insurance as a family. You can buy individual plans from separate companies, if that makes sense for you and your spouse. You can also purchase a family plan from the marketplace. One of you can also be dependent on the other’s employer-provided health insurance plan, if that’s available.

Which Type Of Health Insurance To Buy? 

Generally, there are two types of health insurance: public health insurance (like Medicare, Medicaid, and CHIP) and private health insurance. Most people have some form of private health insurance, whether they purchase it through a marketplace or get it from an employer. State exchanges and the federal exchange can offer consumers both public health insurance and private health insurance.

On-Exchange Private Health Insurance:

On-exchange private health insurance policies are plans that are sold on government-run exchanges, like a state exchange or Healthcare.gov, the federal exchange. On-exchange plans must cover the ten essential benefits, plus any additional services that are mandated by your state government. Additionally, every insurer that wants to participate in a government-run exchange must offer a plan at every metal tier (Bronze, Silver, Gold, Platinum). On-exchange plans are the only plans for which premium tax credits and cost-sharing reductions (government subsidies) are available. We at the Harrin Group are continuously monitoring the future of the Affordable Care Act and will update this page as more concrete information comes available in this ever-changing field.

Off-Exchange Private Health Insurance:

Off-exchange private health insurance policies are plans that are sold either directly by the health insurance company, through a third-party broker, or a privately run health insurance marketplace. These plans must cover the ten essential benefits and other rules dictated by the Affordable Care Act. The caveat with these types of plans is that they are not eligible for any government subsidies, to drive the cost down. They also allow the insurer more flexibility in plan offerings, like only offering plans in a certain tier like Gold.

Short-Term Medical Insurance:

Short-term health insurance plans provide limited health coverage for a temporary gap in coverage. As of March 28th, 2017, these types of plans are limited to a duration of 3 months of coverage, and at that point, the applicant will have to apply again. Keep in mind that short-term medical plans do not count as qualifying health coverage, but these plans seem to be gaining popularity for people who missed the deadline to sign up for the exchange, or are in between jobs,etc. We want to stress that short-term medical plans will not cover any pre-existing conditions, and you do have to fall in certain health parameters to qualify, like height and weight. We also have some options for people who would like coverage beyond 3 months, and want pre-existing coverage also. Please reach out to us if any of these seem like a fit for you currently.

Types Of Networks:

Health Maintenance Organization (HMO)- The most restrictive type of plan when it comes to accessing your network of providers. With this plan, you will be asked to choose a primary care physician (PCP), that is in the network. Think of your primary care physician as the gatekeeper, who will coordinate your care and refer you to any specialists you may need, that are in the network. HMO’s will not cover any out of network costs.

Private Provider Organization (PPO)- These plans are the least restrictive when it comes to accessing your network of providers and getting care outside of your plans network. You typically will have the option to choose between an in network doctor, whom you can see at a lower cost, or the freedom to see an out of network doctor, at a higher cost. These plans do not require referrals from your primary care physician to see a specialist. You may also choose to have a primary care physician with these plans and keep in mind these plan types are generally more expensive than an HMO.

Point of Service (POS)- These plan types are a hybrid of the HMO and PPO. You will have a primary care provider on an HMO style network who will coordinate your care. The difference lies with the access to a PPO style network with out of network options, at a higher cost. The HMO network will be more affordable and you will need to get a referral to see HMO specialists. POS plans typically have more expensive premiums than pure HMO’s but are less expensive than PPO’s.

Exclusive Provider Organization (EPO)- These plans are another mix between HMO and PPO plans. They give you the option of seeing a specialist without a referral. Keep in mind these plans do not cover out of network physicians. EPO plans typically have more expensive premiums than HMO’s, but less expensive than a PPO.

Metal Tiers:

Bronze: In general, have the lowest monthly premiums, costs are split 40% consumer responsibility, 60% insurer.

Silver: More expensive than a bronze, but will typically have a wider network. Costs are 30% consumer responsibility, 70% insurer.

Gold: Gold plans are more expensive than a silver and have the insurer take on more of the costs, with a 20% consumer responsibility and 80% insurer.

Platinum: The highest level in the metal tiers and the most pricey. This comes with a 10% consumer responsibility and 90% insurer.

Health Insurance Cost Factors:

  1. Your age
  2. Your location
  3. Whether or not you use tobacco
  4. Individual or family plan
  5. Your plan category (bronze, silver, gold, platinum)

When To Sign Up?

The Open-Enrollment Period starts November 1st, 2017 and runs through December 15th, 2017. You may be able to sign up outside of this period with a Special Enrollment Period, which enables one with a qualifying life event (having a baby, getting married, loss of coverage) to sign up at any point throughout the year.

More A Visual Learner? Here Is A Quick Recap:

Did You Know?: As of 2016, 27 million American’s do not have any health coverage. And out of those 27 million people, 46% cited the reason being they tried to get coverage but it was too expensive.

The Harrin Group offers free, comparative quotes on health insurance plans from multiple insurance carriers so you can get the best possible rate.

Want to see how much we can save you? Just request a quote to find out.

Sources: The Balance,LearnVest,Healthcare.gov, CNN.com, U.S. Dept. of Labor, Medicaid.gov, VA.gov, CHIP, Medicare.gov, TRICARE, Maryland Health Connection, Bloomberg