Why Do I Need Medical Insurance?

This is one of the most common questions we receive about health insurance. Healthcare costs are among the largest expenses any family will face over the course of their lives.  Children need immunizations and regular check-ups to maintain good health.  Adults need routine exams and testing to stop problems before they start.   Short hospital stays can easily cost tens of thousands of dollars.  Prescription costs can be staggering and are usually recurring expenses that may never stop.  A quality health insurance plan can limit your exposure to these costs and shift the major risks to the insurance carrier while keeping your hard-earned money in your pocket and your family’s health and financial future secure.

Group Health vs. Individual Health

Group health plans can be an excellent deal for some people, but may be significantly more expensive than you need to pay for your coverage.  Under a group health plan, coverage is guaranteed in full with no exclusions for every employee and their family (with some exceptions).  Depending on state laws, employers must have at least 75% of their eligible employees participating in the program and must contribute at least 50% of the employee’s premium as a benefit.  However, they are not required to contribute anything towards the cost for the rest of the employee’s family.

The carrier will look at the average age of the employees and their claims history to determine a premium each year.  For example, a small business of 20 employees with an average age of 50 years old who have all had major health conditions would pay much more in premiums each month than a small business of 20 employees with an average age of 25 years old in perfect health.  If you are a young, healthy individual joining the first company, you would likely pay much more in premium than finding your own coverage on the individual market unless the employer is paying a large percentage of the premiums.  If you are 60 years old and uninsurable due to medical history, then joining the young, health company would be an excellent resource for your needs.  To get a free instant quote and see how much you can save, please CLICK HERE


Co-pay Style Health Plan vs. Health Savings Account/High Deductible Plan

With multiple plans available from multiple carriers, trying to dissect all of the information on your own can be overwhelming.  It is our job as your agent to find the right plan for you based on your needs, but it is also important to have an understanding of their main differences before beginning your search.  There are two main types of plans and all others are a variation on the given benefit levels of these types.  One type includes a “co-pay” for doctor’s office visits that gives you a fixed cost to visit any in-network physician, whether a general practitioner or a specialist (at a higher fixed cost).  These plans also offer up-front prescription benefits with either a fixed cost co-pay per fill, or a percentage cost per fill (depending on the carrier).  Deductibles and out-of-pocket expenses are on a per-person basis and range from $0 deductible to $10,000 deductibleLower deductibles have higher monthly costs and vice-versa.  Once you have satisfied your deductible and any remaining out of pocket expenses (such as coinsurance or separate co-pays), the carrier will pay for 100% of the remaining cost.

The second type of plan is called a High Deductible Health Plan (HDHP) and shifts more initial cost onto you, but comes at a much lower price each month.  Most HDHP’s will pay for 100% of you and your children’s preventative care visits before you pay anything towards your deductible.  Doctor’s office visits are charged at the rate the carrier and physician have negotiated as payment-in-full, and prescription costs are paid by you as part of your deductible.  Once the deductible has been satisifed, the carrier will pay 100% of the remaining costs for the year including any additional office visits, hospital stays, prescription benefits, and more.  Deductibles range from $1,250 (single person) to $11,400 (family) – again, lower deductibles have higher monthly costs and vice-versa.  HDHP deductibles are almost always a single deductible amount for the whole family instead of per-person.  This can significantly lower your potential expenses in the event of a major claim versus the co-pay style plan.

HDHP’s are compatible with health savings accounts (HSA), and give you tax advantages for your healthcare-related expenses.  A health savings account acts as a bank account to be used for health expenses only.  Individuals can contribute up to $3,050 for 2010 and families up to $6,150 for 2010 to the account.  All contributions to the HSA are 100% tax deductible even if you do not itemize your taxes.  Any money not used in a given year will roll over to the following year, all the way into retirement.  At that point, it can be used for Medicare premiums, prescription costs, long term care insurance, etc.  Interest earned on the money in the account accumulates on a tax-free basis and will never be taxed if used for you or your family’s healthcare.

 

How Much Is It Going To Cost?

This is the question that it all comes down to.  What will it cost to insure myself or my family with quality coverage?  Is the cheapest plan sufficient?  Is it worth the extra money for the plan with the best benefits?  The answer is – it depends on your situation.  If you cannot afford expensive coverage, something is still better than nothing.  If you can comfortably afford the monthly premiums and want to give your family the best protection, you may find that a plan with a lower deductible and more up-front benefits works for you.  Usually, the answer lies somewhere in the middle.  If the deductible is too low, the coverage may be so much more expensive than other plans that it simply does not make sense to choose that option.  If the deductible is too high, you may be setting yourself up for disaster if you can’t pay the claim.  A good starting point for co-pay style plans is usually a $2,500 deductible level, or $5,000 for HSA-compatible high deductible plans.  These approximate amounts often represent the best cost-to-benefit ratio for most carriers.

For an instant online health insurance quote for you or your family, please give us a call at 1-888-972-0024 and we will be happy to guide you through the process.  You can also send us an e-mail by clicking here.