Health Insurance QnA
It's hard to imagine a time before common health insurance. A world that when people needed medical attention they had to pay the doctor or hospital directly for their health care costs. Today, most Americans have some form of health insurance whether it is job-provided, and individual health insurance policy, or health care provided through Medicare and Medicaid. Paying cash for care is a thing of the past.
Though there have been numerous reforms to health insurance in America, its original history dates back to the early 20th century. In Oklahoma, a doctor named Michael Shadid began a new trend for health care. He charged a predetermined and flat fee to members of his group and in return provided health care services.
That same year in Los Angeles, CIGNA health care was established. This program provided healthcare to county employees and employees of the city's departments of water and power. The monthly premium was somewhere around $1.50 per month.
Further south in Texas, Blue Cross was created, providing prepaid hospital benefits to nearly 1500 teachers. In contrast to today's insurance in which there are various health insurance rates, premiums were the same for all individuals regardless of health, age, sex or medical conditions. Obviously, determination of premium rates has since changed to include a risk analysis rating system.
Health insurance coverage in masses grew a few years later when Dr. Shadid provided prepaid medical benefits for employees of Henry J. Kaiser Corporation. Nearly 5000 workers and families were covered. Kaiser made his health insurance plan available to millions of other Americans after World War II.
Soon, other organizations such as The Group Health Association and the Health Insurance Plan of New York formed.
Insurance as we know it now - mostly a benefit provided by employment began to take off during World War II. Companies used health insurance as a fringe benefit to encourage people in the labor force. The government supported companies by offering the use of tax benefits and deductions for employers offering coverage. And thus, the role of the employer providing health insurance benefits began.
What is Health Insurance?
Like all other types of insurance such as life, automobile, or homeowner's insurance, health insurance is a contract between the insured and the insurer (company). The insured promises to pay timely premium payments for the assurance that benefits will be paid as outlined in the coverage details.
There are a variety of types of health insurance. The most notable are employer provided group health insurance, individual health insurance, and Medicare and Medicaid. Since most Americans have their insurance through their employer, most contracts are between the employer and insurance company.
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Employer Provided Health Insurance
This is the most popular form of health insurance coverage. While employers are not required to offer health insurance benefits to employees, it is an expected benefit if the company hopes to remain competitive for talent. While there are no laws requiring health insurance is provided, there are laws which protect employees once coverage is implemented. HIPPA, or the Health Insurance Portability and Accountability Act regulates employer sponsored plans to ensure there is no discrimination to individuals due to health history, age, or sex, among other things. HIPPA also protects employees who have lost their job.
HIPPA does not protect individuals which have individual health insurance policies, which is another benefit of a group contract.
In most cases, group health insurance is usually the least expensive option available because the policy is written as a group contract, insuring hundreds or thousands of individuals. The law of large numbers means that the risk associated with health care is then spread out of a number of people, rather than only one as is the case in an individual policy.
If you are uninsurable due to pre-existing medical conditions, a group insurance policy is most likely the best coverage option available to you. Even if you don't work full time, some companies will allow you receive benefits if you are seasonally or part time employed.
In a job-sponsored insurance program, you might be offered limited plan options. There are usually a few different plans ranging from comprehensive to basic coverage.
Obviously, the more comprehensive the coverage, the more expensive the monthly premium while the more basic the policy, the cheaper it becomes. Another important factor in the determination of cost is the out of pocket expenses or deductible.
If you are a health individual that rarely sees the doctor and is not on many prescription drugs, you may consider choosing a plan with a high deductible. This means you will be responsible for all out of pocket expenses until you reach your deductible amount.
If you foresee many trips to the doctor, hospital, or a need for expensive drug coverage, consider a lower deductible plan. Though the premium will be more expensive, the out of pocket costs will be lower once you meet your deductible.
In a group health insurance plan, you might not get the exact benefits you desire such as prescription drug coverage or they may limit you to the doctors you can see. For the most part, the advantages of a quality group insurance policy outweigh the negatives associated with it.
In addition, many companies, such as Aetna offer separate and supplemental insurance coverage. This includes things like vision, dental, or cancer insurance. While you can also get these types of policies individually, it is often more economical when packaged together. These policies work much like health insurance coverage in terms of co-pays, deductibles and coverage limits.
A company will offer Open Enrollment a few times a year. Usually at Open Enrollment there will be a representative from the insurance company or your employer's Human Resource's Department to explain the various plan options and answer individual questions. Many companies will not allow you to make changes to your enrollment between sessions so it's important to get the correct coverage from the beginning.
The representative will discuss how each plan works in regards to co-payments, co-insurance, and deductibles. They will also explain lifetime limits, premium payments, and other out of pocket expenses as these vary greatly from plan to plan.
If you are new to your job, there might be a waiting period before you are eligible to receive benefits. In the mean time, you will not be covered under the group health insurance plan. You can consider an individual health insurance policy in the mean time, or see if you are eligible COBRA.
Benefits will vary from policy to policy. It is important to identify what the terms in regards to your policy are. It's important to know what is covered and what is not covered. If you have employer provided health insurance, most of the time this type of information can be found in your health plan benefits handbook you should receive during Open Enrollment. Remember however that a benefits handbook is not the contract itself, but rather purely informational.
There should also be a contact person at your office that handles benefits should you have additional questions. Depending upon the size of the company, this could be the Benefits Coordinator, Human Resource director, or owner of the business. If you can't receive help locally, try reaching a customer service representative using the 1-800 number on the back of your insurance card. Likewise, most insurance companies provide benefit information via a secure 24-7 website.
Websites like Aetna.com have a "Log In" section for covered individuals to check the details of their plan, view providers, and view benefit information any time.
HMO or PPO?
Many group health insurance policies will provide both HMO and PPO plans. So what's the difference?
HMO plans, or Health Maintenance Organizations are usually the cheaper of your health insurance options. This is because health care providers contract directly with an insurance company to offer their services at a fixed cost.
The downside to the individual is that you are required to see a physician that is within the organization. So if you have a primary care physician you have seen for years and they are not a member of your HMO, it's likely you'll have to switch to a new physician that is your network.
With HMOs there is also an additional step to take before seeing a specialist. In order for insurance to cover a trip to a specialist doctor, you must first be referred by your primary care physician. This means one extra trip to the doctor's office you might have avoided.
PPO or, Preferred Provider Organizations are more expensive, but offer more flexibility in regards to which physician you see. If you do not have an attachment to any current primary care physician, it might make sense to chose an HMO to keep insurance costs lower.
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Individual Health Insurance Policies
If you are unemployed, self employed, a student, or simply not covered by a group health insurance plan, you might consider obtaining an individual health insurance policy. Usually these plans are more expensive. However, unlike a group health insurance plan, you are not limited to a certain insurance company or program. In this sense, an individual health insurance plan can be custom fit for your particular situation. This gives you the benefit of comparing cheap insurance rates until you find the best coverage.
For example, for a young adult woman in her child bearing years, maternity coverage will greatly increase the premium you pay for your insurance. In a group insurance policy, you might not have an option to dis-include this provision. But in an individual policy, if you are certain you will not need such coverage, you could save a lot of money by purchasing a policy that does not cover maternity costs.
The downside of an individual health insurance policy can be the costs and obtaining coverage. The underwriting process (which includes medical history and other important personal factors) is much more stringent for an individual than for a group policy. If you are uninsurable due to certain pre-existing conditions, you might find it impossible to obtain an individual policy, or you might find it extremely expensive.
If you must get an individual health insurance policy, I recommend you shop various companies to compare cheap insurance rates. To find cheap health insurance quotes, you can talk with a local agent or shop online.
Places to go to look for cheap health insurance online include EHealthinsurance.com, Anthem.com, Humana.com, and aetna.com.
You will have to fill out basic information and also complete medical exams. The premium for your policy will most likely be just an estimated cost until you complete the necessary medical requirements.
If you are self employed, but you have a spouse who is eligible for group health insurance, you might first consider whether it is cheaper (and or better coverage) to join in on their plan, rather than purchase individual coverage. Most companies allow benefits to be extended to the employee's spouse, children, and other dependents.
With health care costs rising faster than the cost of inflation, one night stay in a hospital could be too much of a burden for most Americans if it weren't for insurance. Because of this, it's important to consider your options.
While group insurance is the most common type of insurance for American's age 65 and older, some people such as the unemployed, self employed, or students, are unable to get group coverage. In this case, look for companies such as Aetna that provide cheap insurance for individuals. You can get cheap insurance quotes on line by visiting any health care provider's website. At the bare minimum, individuals should at least have catastrophic insurance coverage to protect against the worse.