Health Insurance

2 Types of Health Insurance


• Individual – Covers you, your spouse, and your children only. Individual means that you are paying for the policy yourself instead of your employer.

• Group – Covers multiple people from an employer’s standpoint,

o If you have 18 months of continuous (permanent product) coverage prior to your insurance policy, the insurance company cannot deny you (or add a rider clause) for pre-existing conditions.

• NOTE: Dental and Vision are completely separate from Health insurance. You have to buy separate policies to cover services for these areas or pay more for the premiums and the coverage isn’t always as good.

Terminology

• Deductible – The first amount you pay before the insurance company pays anything. You can choose different deductible.

• Coinsurance – You pay for a percentage and your insurance pays the rest.

o If it says 100% after deductible, it means that the insurance company pays the total amount.

o 80/20 is the most common. It means that the insurance company pays 80% of the bill; you will pay 20% until you reach the “Out of Pocket Maximum”.

• Out-of-Pocket Maximum – The most you would have to pay out of your pocket, after your deductible has been reached in a coinsurance plan. Pay your deductible first, then you start to pay coinsurance (20% of bill) until you reach the max. (Kind of a deceptive term, as it doesn’t count your co-pays or deductibles.)

• Network – these are the doctors and medical providers that belong to a special group that you have to see for your insurance to be in full effect, they have agreed to take a discounted price from the insurance company for their services. You pay more money if you see providers that are not in your network, this is extremely important. It is your responsibility to know that you are in network.

o Usual & Customary Charges – if you go out of network, your insurance company can deny charges that they say are more than the “usual and customary” charges for a visit or procedure. Part of your contract.

• Initial Rate Guarantee – Will hold the rates stable for a certain amount of time. As an individual, you can choose 12, 24, 36 months. With group, only 12 months.

• Lifetime Maximum Benefit – The maximum dollar amount that they will pay on your behalf. Listed per person on the plan.

o You should increase beyond $1 million if you have the option. Sometimes even $3 million is not enough.

• Co-pay – An agreed amount that you will pay the doctor for a standard office visit. Usually ranges from $30-$50. You pay this BEFORE you pay your deductible and coinsurance.

o Sometimes there are “split co-pays” on group plans, one price for your normal or primary care doctor (general practitioner, pediatrician, etc..) and another price for specialists. Usually that amount is higher.

• Prescription Co-pay – Similar to office co-pays, except for prescription drugs. Usually these are tiered by generic, brand name, and super brand name/specialty (newest drugs on the market). Does not count toward your deductibles.

• Maternity – Covers a female’s pregnancy and birth of the child, covered for persons on the insurance plan. Spouses only if it is a family plan.

o Covered differently for individual policies as opposed to group policies. Usually there is a waiting period on individual plans. Make sure you do research if you are buying an individual plan.

o Generally fairly expensive on individual policy, the insurance company is looking to recover their expected payout.

• Preventative Care – the insurance company will pay a certain amount for items like an annual physical, to encourage people to use specific services to catch serious illnesses at an early stage, before there is a larger payout.

• Rider – A separate condition (clause) listed on a policy that charges extra for another medical condition, or refuses coverage for a certain illnesses or injuries. It can be for a short period of time or indefinite. Be careful if an insurance company is offering a policy with a rider clause. It might be a good idea to shop around at this point.

• Pre-existing Condition – Something that happened medically (either illness or injury) prior to you getting this insurance.

How to Choose Between Policies

1. What are they covering? Just because it’s more expensive, doesn’t mean it’s better. You need to research what the policy includes and excludes.

2. What’s the maximum out-of-pocket that you will have? How much is the deductible? What is the coinsurance?