Helping you find cheap premiums, not cheap coverage
Health Insurance If you have been without work for any length of time, or if you have chosen to work for a company that does not offer medical coverage, you have probably experienced the frustration of trying to find individual health insurance.
Of all insurance products on the market today, individual health insurance is undoubtedly the most difficult to understand, and If you are accustomed to group health insurance, be prepared for the fact that private health insurance is a completely different animal.
In a group, you are more protected from rate increases because the rates increase based on the demographics and usage statistics of the entire group. In a very large company, that group will be compared to other groups which helps keep the cost down.
With many personal health insurance policies, the rates can go up based on simply your own usage of the policy. Also, most group insurers impose no more than a six month waiting period if pre-existing conditions apply while a private insurer can surprise you with up to two years of refusal to pay for anything they consider "pre-existing."
Finally, group insurance cannot discriminate against a single individual. If an employer hires you, you will be eligible for whatever health insurance the business offers, subject only to the terms of the business contract.
Private health insurance companies cannot terminate your coverage if you have a contract that says "guaranteed renewable," but they can in some instances, raise your rates to the point where you are simply priced out of it because you cannot pay the premium.
Understanding deductibles and copays. Under group insurance, you usually have a deductible—which is the amount you must pay each year before your insurance covers anything (although it might not apply to prescription drugs or certain preventive procedures).
Once that is paid, you have copays and co-insurance. A copay is the flat fee you pay for a doctor's visit, a trip to the emergency room and so forth. Co-insurance is when you have to pay a percentage of the total negotiated cost.
The most common co-insurance is an 80/20, meaning you will pay 20% of the bill after you deductible has been met. Each year, you also have an "out of pocket" max. Once you reach the maximum out of pocket, your insurance will pay all approved costs for the remainder of the year.
Deductibles and co-pays for individual insurance are often handled differently. For example, you may have one deductible for the hospital, a different amount for "ambulatory" (which means lab tests), and a different amount yet for the doctor's visits.
Even your drug coverage may have its own deductible. None of the deductibles contribute to any of the others, and if you go out of the network, you may have a different and much higher deductible yet. Again, a deductible met out of the network will not contribute to a network deductible.
One advantage to breaking up the deductible in this manner is that you have coverage on these lower cost portions of your health care even if you have not yet met the deductible for the hospital.
Just for example, if your pharmacy deductible was $50.00 and your hospital deductible was $2500, you would have drug coverage after the first $50 instead of having to meet the entire $2500.
On the other hand, a disadvantage is that you could pay a lot of money in health care without ever going into the hospital, but if you should have a hospitalization incident, you have the entire hospital deductible still to pay. Also, if the deductibles are too high, you could pay a lot of premium and receive little or no benefit.
Another tricky feature of individual insurance deductibles is that some companies treat the deductible as a "per event" rather than per year. In other words, if you are hospitalized for cancer, you will pay the deductible, but will never pay it again for the treatment of cancer.
However, if you are hospitalized for some other disease, even in the same year, you could be paying another hospital deductible.
A final quirk on deductibles is that some companies apply your deductible and your out of pocket max simultaneously.
That is, you have no coverage until you have met your deductible, but your deductible is also your out of pocket max; thus when that price is met, your insurance is supposed to pick up the rest of the tab.
Once your deductible has been met, you will pay a co-insurance for your care. Unlike group plans, many individual plans offer no better than a 70/30 arrangement for network doctors. You may drop to a 60/40 or even a 50/50 if you go out of the network.