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[H172]Health Insurance For The Uninsured

by Bobby Kirby, Bob

Recently, I read an article in this publication, “The Middle-Class Struggling with Health Insurance.” Health insurance costs are certainly an issue for everyone today, especially the self-employed and those working for small companies. Many companies are trying to cut costs and those cost-cutting measures may eliminate employee health coverage, forcing employees to find coverage on their own. Consequently, many employed individuals and families are now facing the same challenge small business owners have been facing for years—finding affordable insurance.

The nation's uninsured population of approximately 45 million has risen dramatically in recent years. According to Todd Stottlemyer, president of the National Federation of Independent Business in recent testimony before Congress, nearly 63% of the uninsured are small business owners or employees of small businesses.

Many uninsured are unaware of an alternative to costly individual health polices. Individual policies, unlike group health insurance, have premiums based the risk factors of the particular individuals covered by the policy, meaning the risks are not shared by a large group, making the polices much more expensive than group insurance. Without knowing about alternatives to individual polices, many will simply elect to forgo health insurance once confronted with the enormous costs of individual health coverage.

Individual polices not only are expensive, they limit the insured's ability to design a plan that meets their needs. Individual health polices are usually “off the shelf” polices that have set coverage.

In addition, many who leave a corporate position and enter business for themselves are shocked at the real cost of health insurance. While in their previous position, their employer was paying a portion of their premium. What they paid wasn't the premium for their insurance, but a percentage of the premium. When faced with the reality of having to pay the full premium themselves, many refuse, leaving themselves and their family uninsured.

Health insurance costs are undoubtedly rising. The cost of healthcare continues to increase, from the cost of visits to the doctor, hospital costs, pharmaceutical costs, emergency care, and all other aspects of healthcare.

Yet, perceptions about healthcare and insurance have not changed. People want the freedom of self-employment, or to work for a small company, but they want the same benefits and costs they have become used to when working for a major corporation.

The self-employed and those working for small companies must rethink their concept of health insurance. Health insurance, like auto insurance and home insurance, is designed to protect against catastrophic loss, not for every sniffle. Rather than viewing health insurance as a go to the doctor free card, health insurance should be viewed as protection against disaster.

Home insurance doesn't protect against losing a single shingle or two. It protects against catastrophic roof damage. Auto insurance doesn't protect against dings, minor dents and flat tires, it protects against significant loss due to accident, fire, theft, or other damage. Health insurance should be viewed no differently for the self-employed. It is protection against major loss, not minor dents and dings.

In addition to a change in the way health insurance is perceived, uninsured people, whether self-employed or working for a company that doesn't provide a group policy, have alternatives to the costly individual policy. Joining a group to purchase health insurance through business or industry associations cannot only reduce the cost of the health insurance policy; many times the individual has the freedom to design a plan that works for them and their family. Moreover, association policies are typically available to both self-employed and employed individuals and families.

Calynn Colceri, a hair stylist, had an individual plan through a well-known national company. She had bought her individual “off the shelf” plan based solely on price. She was unhappy with the coverage, which didn't meet her needs and she was distressed that the company increased her premiums on a regular basis. By showing her a group plan through an association, I helped her design a plan that meets her needs precisely, expands her coverage in many areas, and is cheaper than her individual policy. Not only have her premiums decreased and her coverage improved, she has also gained a number of additional business benefits that directly affects her business through her association membership.

If designed correctly, self-employed individuals can also take tax credits for their deductibles, dental, vision and other medical expenses, up to 100% of the costs, further reducing the real costs of the health insurance. To determine how much, if any, tax savings one would be eligible for, a tax professional should be consulted.

Although a serious issue, health insurance can be a manageable expense for most Americans. Certainly, it may require a new mindset regarding the use of insurance, but if approached rationally and by seeking out group alternatives to the individual health policy, health insurance need not be the financial monster it is perceived to be.

Health Insurance does not have to be complicated. If you understand the core principles behind a health insurance policy and the system itself, you are way ahead of the majority. People often get too caught up with what insurance company they believe to be superior to others or what insurance plan they believe will conquer the rest. Long story short, there is no one insurance company or plan that would make even God jealous.

Insurance premiums are regulated by the department of insurance at the state level. No one insurance company or agent can offer you discounts or a magic dream policy that will cover hospitalization 100% at 5$ a month. You will always pay the same premium for the plan listed weather you go directly to an insurance company or through an insurance agent.

In the insurance market today premiums generally increase about every year. However, there are exceptions to this general rule. Some carriers can negotiate up to a 2 year rate guarantee. This can directly provide more security to the insured. Rate guarantee plans are usually a wise choice considering the current status of our economy in 2009.

Key parts to a health insurance plan

If you become familiar with the following core parts of a health insurance policy you will be much more informed the next time you find yourself shopping the insurance market place. It is better to understand your policy now instead of when you end up in the hospital! If a plan has an extremely low premium chances are it is lacking in one of the following areas:

Deductible

This is often the first part of the health insurance policy that you will encounter when viewing or researching a plan. A deductible is the amount of money that you must pay up front before the insurance company will cover you. You start paying your deductible when you start incurring medical bills. Let's say I go to the hospital for stitches in my arm and the hospital bill ends up costing $250. If I have a health insurance policy that has a $1500 deductible I must pay the full $250; now I am left with $1250 of my deductible to satisfy before the company will start paying a Co-insurance percentage (see below) of my bill.

Out-of-pocket maximum

Out-of-pocket maximum is the most important element of a health insurance policy and basically the reason you buy it in the first place. It is the total amount of money that you can be exposed to in a given year. For example, if I have an out-of-pocket max of $4000 and I have a serious accident that leaves me with $1,000,000 in hospital bills, I will pay $4000 and the insurance company pays the rest.

Prescription Drug Coverage

People often get into some hot water if they don't take a close enough look to see how prescription drugs are covered within their policy. You may be extremely healthy and feel that you do not need medication but you would feel differently if you had a catastrophic emergency that required expensive prescription drugs only to find out later that they were not covered. The end result could leave you thousands out-of-pocket!

Some insurance companies will have plans offering generic Rx only. Again this will result in you paying full price for brand name drugs if some reason there is no generic available. Most companies will offer generic Rx, no Rx or apply a yearly maximum cap to lower the overall cost of the health plan. It is all a matter of how you weigh the risk but it is usually recommended that you purchase full prescription drug coverage. With full Rx benefits it is common to see a $35 co-pay for brand drugs and a $10 co-pay for generic. It is common to see a small brand Rx deductible applied to brand name Rx. This can range anywhere from $250 to $750.

Co-Insurance

Co-Insurance is simply the percentage that your medical bills will be covered at after you satisfy the deductible. If I have a $1000 deductible with 80/20 co-insurance and a $3,500 out-of-pocket maximum this means that once my deductible is satisfied I will be responsible for 20% per medical bill until the total cost reaches $3,500 (deductible is usually included in out-of-pocket maximum).

Co-payment

More than likely you have heard the term "Co-payment," which refers to a flat dollar amount that you pay for a specific medical service. It's common to have a co-payment for primary care and preventive care office visits. Co-pays can range anywhere from 10-50 dollars (sometimes more) depending on the service you receive and what type of policy you enroll. If you visit the doctor frequently you should enroll in a plan offering co-pays before satisfying the deductible. On the other hand, if you are very healthy and never go to the doctor it would be beneficial to enroll in a high deductible HSA compatible plan with out co-pays.

Article Source : Best Medical Insurance

About Author

Both Bobby Kirby & Jeremy Lewis are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

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