California Health Insurance can be Affordable

What is Health Insurance?

Health insurance is a method utilized by individuals to mitigate the financial risk that could result from an injury or illness. With traditional health insurance, an insurance company guarantees payment of a large portion of medical bills as they are accrued by a policy holder, in exchange for a set payment amount. The policy holder is responsible for paying the payment (called a premium) to the insurance company, which then offers the policy holder a method to obtain affordable health care. The premiums paid by policy holders to the health insurance company are pooled together with the premiums of other policy holders. Proceeds from this pool are used to offset the costs of health care treatment needed by the insureds. Since only a certain percentage of the total policy holders will actually use the benefit, the entire amount of the pool of premiums will not be used. This allows for there to be a "reserve" of funds available to cover future costs. California has several state-sponsored insurance programs that offer specialized coverage for those who are unable to obtain health insurance coverage and/or can not afford it. The pool of funds they draw from to pay for the health care costs is a pool of both premium payments and tax funds.

Why is Health Insurance Important for California Consumers?

Health insurance mitigates your financial risk by reducing the amount you have to pay for medical visits, procedures, supplies and medications. Let's say you have a health insurance policy that has a premium of $100 per month. After having the policy for 6 months, you will have paid a total of $600 in premiums. During this time, you have not visited your physician in Anaheim or had any other medical expense. After you pay your sixth premium, you have a minor fall while visiting your Uncle in Fresno. During the fall, injure your ankle and you are taken to the emergency room. In the emergency room, the physicians examine your ankle and foot, take x-rays, bandage your ankle, give you a pain reliever and release you from the hospital with a pair of crutches. Before you leave, you are asked to make a $50 payment to the hospital. One month later, you receive a notice from the hospital that contains a detailed bill including all the expenses from your visit. The total cost of the expenses, which consist of x-rays, crutches, a physical exam, bandages and pain reliever, is $5,000. The bill reflects the $50 payment you made while in the hospital, shows a payment from the insurance company of $4,550, and shows the bill paid in full. You have escaped this expensive accident by paying only $600 in premiums for your insurance policy and a $50 co-pay at the hospital. Had you not had insurance, you would have been responsible for the entire $5,000 bill. This is how insurance mitigates your financial risk.

California Health Insurance Terminology

There are many options available when shopping for affordable health insurance. Before determining what kind of health insurance and which health insurance plan is right for you, it is important to have a good understanding of the terminology used within the health insurance industry.

COBRA: COBRA allows employees, who terminate employment from a group, keep their health insurance for a limited period of time while they find other coverage.

Co-pay: A co-pay is the fixed amount the policy holder is expected to pay to a provider for medical treatment or medications. A co-pay is a small portion of the total bill and the health insurance company picks up the remaining amount.

Deductible: A deductible is an amount of money that policy holders must pay out for medical expenses before their insurance company will pitch in. A deductible is different from a copay because it is not a fixed amount for each visit or procedure. Instead, it is a base amount, anywhere from $500 to $5,000, that must be paid before the policy "kicks in" and the holder becomes responsible only for co-pays.

Health Savings Account (HSA): A health savings account is an account that allows the holder to set aside a certain amount of money, using pre-tax dollars, to pay for medical expenses throughout the year. In most HSAs, the funds can be used for co-pays, dental and prescription vision expenses and medications. Some HSAs allow funds to be used for massage therapy, acupuncture, vitamins, travel expenses related to obtaining specialized treatment, and alternative healing. Most HSAs require that all funds deposited be used by year end, or the remainder goes back to the IRS.

Lapse: When a policy holder neglects to pay his or her premium on time, the policy becomes void. This is considered a "lapsed" policy.

Limits: Limits are the maximum amounts that insurance companies will pay for their portions of a policy holder's medical expenses under the policy. Limits are generally in the millions of dollars and most policy holders will not reach them. If a policy holder does reach his or her limit, then they will become solely responsible for any medical costs after that point.

Preexisting Conditions: Preexisting conditions are health diagnoses the policy holder has had during past doctor visits. These diagnoses will indicate a chronic illness or injury, and an insurance company may choose not to cover them for a certain period of time.

Premium: A premium is the monthly or annual cost of a policy holder's insurance policy. This is the amount the policy holder must pay in order to be covered under a policy.

Types of California Health Insurance Coverage

There are many different types of health insurance coverage available. If you want coverage only for catastrophes, and not routine visits, you can obtain major medical insurance. Major medical insurance is a good option for California residents who wish to obtain cheap insurance for a catastrophic health event. With major medical coverage, the insurance company only pays for emergency or catastrophic illness and treatment, not for routine or preventative care.

If you work for a company with many employees, you can get group health insurance coverage. With group health insurance coverage, your employer may pay part of your premium and your policy will be underwritten as part of the group instead of as an individual. If you have health problems, group health insurance offers an affordable way to obtain a policy since you avoid scrutiny of your own health but instead is underwritten based on the experience of the group as a whole. Unfortunately, once you leave the group you can only be covered under COBRA for up to 18 months.

Individual insurance is the most portable, affordable and accessible choice for consumers. With individual health insurance, you can choose the plan that is right for you by choosing the benefits, deductibles, premiums and co-pays you need. Individual insurance also allows you to own the policy and can keep it as long as you pay your premium.

The state of California offers a tax subsidized program for the uninsurable called the Major Risk Medical Insurance Program (MRMIP). With MRMIP, California residents with preexisting conditions who can not get approved for individual health insurance policies have the opportunity to apply for coverage under the California major risk pool. There is a premium payment required once you are accepted, but your premiums are subsidized by taxes paid on tobacco products. This program is only open to residents who have no other option for insurance coverage (including COBRA).

California also offers a program for low income families with uninsured children. The Healthy Families Program provides health, dental and vision coverage to the children of parents who can not afford to purchase insurance for their children, but earn too much for public assistance (Medi-Cal). At this time, the coverage does not extend to the parents and the low premium payments are subsidized.

Another program offered to California residents and geared toward children is the Access for Infants and Mothers Program (AIM). AIM provides prenatal care to pregnant women as well as preventative care to keep pregnant women healthy. Low income pregnant women are asked to pay a low, subsidized premium for the coverage.

Types of Individual and Group Coverage Health Insurance in California

There are many options available for those who choose individual and group health insurance. The first choice is to decide between a two types of physician-networked insurance plans called, PPO plans and HMO plans.

A PPO is a Preferred Provider Organization. If you choose to have coverage under a PPO plan, you will be working with a network of physicians under contract with the insurance company. PPOs will allow you to consult with a physician outside of their network, but will reduce the amount of the expenses they pay if you go outside the network.

An HMO is a Health Maintenance Organization. With an HMO, you still work with a network of participating physicians, but unlike a PPO, the HMO generally offers no coverage if you go outside the network.

Choosing the Right California Health Insurance Coverage for You

When attempting to choose the health insurance plan that is right for you, it can be overwhelming to consider and understand all of the options available. California health insurance companies and state subsidized programs offer a seemingly endless myriad of options and conditions in their health insurance plans. Considering the following factors will help you narrow down your choices and hone in on the correct plan for you.

The first aspect to consider in choosing a health plan and provider is your health history. If you have a health history free of preexisting conditions, you will have more flexibility in choosing a plan. If you have a preexisting condition then concentrate on individual health insurance plans that have a forgiving underwriting policy or who can exclude a preexisting condition for a set period of time. If you have a heart condition or other serious chronic health condition, you may want to focus on group health insurance coverage through an employer or fraternal organization or, apply for California's Major Risk Medical Insurance Program. Pregnancy is also considered a preexisting condition, so if you are pregnant, you may wish to apply for California's AIM program.

The next consideration when determining what insurance plan to buy is the cost of covering dependents. In some cases, it may be more cost effective to buy separate individual health insurance policies for your spouse and children, or it could be more cost effective to bundle them. In the case of parents who make too much to qualify for public assistance, but too little to afford coverage for their children, California's Healthy Families Program could be your answer. To apply for this program, your children must be under 19 and residents of California.

Next, evaluate the importance of deductibles in your policy. When looking for affordable health insurance you may need to consider choosing a policy with a higher deductible. When you choose a policy with a higher deductible, your monthly premium will be lower, but your out-of-pocket costs will be higher when you actually go to the doctor. One way you can get some added benefit is by combining a health savings account with a high deductible insurance policy. You can then make a pre-tax payment to your HSA in the amount of your deductible. This allows you to combine tax benefits with cheap health insurance.

Age is always an important factor when choosing an individual health insurance plan. Health insurance for seniors can be affordable, especially once you qualify for Medicare. With Medicare, the only other health insurance policy a senior needs is a Medigap policy. Medigap policies act as a supplement to Medicare coverage and fill any gaps in coverage. Medicap covers gaps such as Medicare deductibles, prescriptions not covered by Medicare and travel expenses for specialized care of an illness or injury.

Once you have decided on the various factors discussed above, and you've changed your options around to develop a premium that you can afford to pay, you should decide whether to pay your premium monthly, semi-annually, or annually. The major concern with your frequency of premium payments is the possibility for the policy to lapse if you do not pay on time. Let us say you live in Sacramento. Your insurance company's home office is in Santa Ana. When you mail your monthly payment, it travels from Sacramento to Stockton, through Bakersfield, down through Long Beach and Huntington Beach, to finally end up in Santa Ana two days later. If this premium payment happens to get to your insurance company outside of your grace period, you could have a lapsed policy on your hands. Semi-Annual or Annual payments give you less opportunity to mail your payment late, and increase your chance of keeping your insurance policy active. Additionally, you should be able to opt for an electronic payment that can be automatically debited from your bank account, thereby further reducing the possibility of a late payment.

Leading Health Insurance Plans in California

As a resident of California, you have access to health insurance coverages from most major insurance companies in the United States. There are many insurance companies that specialize in insuring California residents.

Blue Shield of California has locations in Los Angeles, San Diego, San Jose and San Francisco. More than three million California residents rely on Blue Shield of California for their health insurance needs. Their website allows prospective clients to apply online. They also have very detailed information about their plans, deductibles, co-pays and rates online.

Anthem Blue Cross of California has a home office in San Bernardino. Their plans are available to California residents from Riverside and Irvine to Glendale or Fremont. You can apply for coverage on their website. They do include some information about their plans on their website, but no cost information.

PacifiCare is a United Health Care company that represents California residents. Their HMO network includes Primary Care Physicians in most cities including Oakland, Chula Vista, and Modesto. You can request a quote online, and they do have information about their plans and Health Savings Account online.

Conclusion: California Health Insurance Protects You

Health insurance is a vital part of any financial plan. Without health insurance coverage, individuals could lose all the assets they have worked so diligently to build. Future goals and dreams can be crushed, and the health of California residents could be compromised. The state of California has been instrumental in creating a health-secured state by developing affordable, subsidized programs to help the uninsurable and low-income. Putting an affordable health insurance policy in place for you and your family through a state-sponsored program or an independent insurance plan can guarantee your success, health and happiness for generations to come.