Illinois Health Insurance- What is it, and how does it benefit residents?

Health insurance is an affordable method of keeping health care costs inexpensive and predictable, with the help of an insurance company. Health insurance policies give policyholders the ability to pay a fixed premium in exchange for medical treatment that could be incurred in the future while also making the best medical care easily accessible.

Insurance policies offer many different benefit options. Depending on your health insurance policy, you may be expected to pay a copayment (usually between $25 and $100) at the time of treatment or to pay a specified amount out of pocket (called a deductible) before your health insurance company begins to make payment. When facing medical bills in the thousands of dollars, this small premium/ copayment combination makes accessing the medical treatment affordable on almost any budget. From Chicago to Peoria, Rockford to Elgin, residents statewide with chronic illnesses such as asthma face an expensive, never-ending condition that health insurance can help to make affordable.

In 2004, over 20,000 asthma sufferers in Illinois were discharged from hospitals statewide. On average, they were each hospitalized for three days in order to treat their asthma related symptoms. On average, each of these Illinois residents received a bill for $12,000 to cover their stay. Those with health insurance will have paid their minimal copayment along with their annual premium, and will be saving thousands of dollars. For those without health insurance, this $12,000 dollar bill owed to the hospital is a tremendous burden. It also has the potential to become a burden on all uninsured Illinois residents because, should anyone default on their bill, the hospitals that treated them will be forced to increase the cost of treatment for all patients. Health insurance can help you avoid large, unexpected bills for treatment as well as increases in treatment costs that come with inflation and defaults.

Using the law of large numbers, insurance companies can easily guarantee payment of these expenses. Pooling the insurance premiums of all policyholders, the insurance companies create a reserve of funds. They pull from this reserve to pay for the insured expenses of their policyholders.

Terminology used in this section:

Premium: A premium is the amount of money a policy holder must pay in order to keep a policy from lapsing.

Copayment: A copayment the fixed amount policyholders are obligated to pay out of pocket for medical treatment or medications. The copayment is due at the time of treatment and is generally a small fraction of the entire bill.

Deductible: A deductible is a threshold dollar amount that a policyholder must pay out of pocket for medical treatment before their policy begins to make payment. You can choose to buy a policy without a deductible. If your policy has a deductible, you will pay all medical expenses out of pocket until your deductible has been satisfied.

Choosing the Right Health Insurance Policy for Illinois Residents

There are many choices to make and factors to consider when determining which health insurance policy is right for you. While each situation is different, the following list will help you wade through your options and design the perfect policy.

Major Medical: Major medical policies are an inexpensive option for policyholders who aren't concerned about routine doctor visits or preventative care. Major medical policies offer coverage for catastrophic illness, accidents or surgery only. They can be used for relatively healthy individuals who are concerned about the financial impact a serious illness or accident would have on them. Major medical policies offer the benefit of a low premium since they are used infrequently and the risks associated with them are low.

Individual Coverage: Individual coverage is best for individuals who are healthy with no preexisting conditions. When underwriting individual coverage, your individual health history is considered so, the healthier you are, the cheaper your policy will be. With individual coverage, policyholders are given coverage for routine doctor visits and preventative care. Major illnesses and accidents are also covered. Individuals can choose plans with deductibles or copayments, depending on what their budget allows. Should you choose a policy with a deductible, you can combine it with a health savings account (HSA). HSA's allow you to contribute a fixed amount of pretax dollars to an account that can be used to pay health care related expenses- including deductibles.

Group Coverage: Business large and small, fraternal groups, colleges and unions can all be providers of group insurance coverage. Individuals with preexisting conditions or who may be deemed uninsurable when considering individual policies will find group coverage to be affordable and accessible. Group policies are underwritten using the experience of similar groups, so your individual health history is not a consideration. You must remain a member of the group in order to continue coverage, but COBRA can help you with any transitions by allowing you 18 months of coverage when you leave the group.

State Subsidized Programs: The state of Illinois offers many state subsidized programs for low income and uninsurable individuals and families. Their state sponsored high-risk pool, "CHIP" offers affordable health insurance coverage to uninsurable Illinois residents. Additionally, they offer subsidized pharmaceutical programs and health benefits to adopted children.

Terminology used in this section:

Underwriting: The process of reviewing a proposed insured's health in order to assess their overall risk to the insurance company if they were to become insured. This process is used to decide if the proposed insured should be approved for coverage and if they should be charged an additional premium to hedge against increased risk.

Health Savings Account (HSA): An HSA is an account used to hold funds to be used for out of pocket medical expenses. These expenses could include co-pays and deductibles. The money deposited into an HSA is deposited on a pretax basis and can only be used for authorized expenses. There are many uses that may be sanctioned by your HSA provider including: acupuncture, massage therapy, and travel expenses related to an illness. Check with the company providing the HSA to find out what the allowable expenses are.

Preexisting Conditions: Any chronic illness, injury or infection that has been diagnosed in a policyholder before he or she took out their policy. Insurance companies can exclude any preexisting conditions from coverage benefits for a specified time period and can decline to cover an individual with certain preexisting conditions.

COBRA: A system by which you can continue group health insurance coverage even after employment or association is terminated with a provider of group health insurance. COBRA guarantees the continuation of existing coverage for up to 18 months or until you sign up for coverage under a new plan (in cases of divorce or death of the group member, COBRA can allow for longer coverage). Policyholders who elect to take COBRA coverage should expect to pay a higher premium under COBRA than they did with the group plan.

Illinois Health Insurance Coverage Options

Once you've determined what type of policy is right for your (major medical, individual, group or state subsidized), you've got to choose the type of coverage you get within the policy. Here are some options to consider.

PPO or HMO: Choosing between an HMO and a PPO is especially difficult if you already have a physician you enjoy seeing. Health Maintenance Organizations (HMO) are generally less expensive then Preferred Provider Organizations, but they restrict the list of physicians you are able to see. With an HMO, your insurance policy will only pay for visits to physicians in their network. PPO's, while more expensive, allow you to see physician's outside their network, but reduce the amount of insurance benefits you will receive should you do so.

Age: If you are over 65, you are most likely covered by Medicare. There is a gap in the benefits Medicare coverage offers and out of pocket expenses, so you may wish to consider buying a Medigap policy. Medigap policies will pay deductibles, copays, alternative healing expenses, and other treatment expenses that Medicare does not.

Preexisting conditions: Illinois' Comprehensive Health Insurance Plan (CHIP) is a fantastic resource for uninsurable Illinois residents. Insurance costs of CHIP are paid for by combining your premiums with funds from Illinois' state general revenue fund. This guaranteed insurance coverage with state subsidized premiums helps you to reign in your health costs and ensures that you get treatment when you need it. It may be more expensive than group insurance coverage, so be sure to find out if you are able to obtain group coverage through your employer, union or associations first.

Deductibles: Your personal budget will be the determining factor in whether or not you have a policy with deductibles. The affordability of a high deductible policy is unmatched. For healthy individuals, this offers an inexpensive safety net.

HSA: HSA's can be used in combination with high deductible insurance policies to offer some tax benefit along with a specialized account to help defray out of pocket expenses. For some individuals, an HSA is the only type of policy they have. While this means they pay for medical expenses completely out of pocket (HSA's are not insurance policies and offer no copayment options), they enjoy the tax benefits afforded by participation.

Premium payments: You will need to determine how often to pay your premium. You can choose monthly, quarterly, semi-annual, or annual payments. In order to avoid policy lapse, make sure you choose a payment plan that you can stick to. You may also want to ask about electronic payments to further reduce your risk of lapse.

Terminology used in this section:

Lapse: A lapse is a policy termination as a result of nonpayment of premium.

Major Health Insurance Providers in Illinois

In addition to state subsidized programs, Illinois residents can choose from most of the major insurance providers in the United States. Several major insurance carriers have developed programs specifically for Illinois residents. These companies include:

Unicare of Illinois: Unicare of Illinois offers PPO's with a network of physician that stretches nationwide and HMO plans. They also have a supplemental plan that covers alternative healing, fitness and more. They have offices statewide including Aurora, Naperville and Joliet.

Blue Cross Blue Shield of Illinois: BCBS of Illinois' website offers free rate quotes, plan information and physician and hospital search tools. They provide their policyholders with many plan choices including Medicare supplement plans, prescription drug coverage and health savings accounts. They have offices statewide including in Springfield, Peoria and Waukegan.

Aetna of Illinois: In 2003, The National Committee for Quality Assurance (NCQA) awarded Aetna of Illinois the, "Excellent" accreditation. In keeping with their award for excellence, Aetna of Illinois has a highly interactive website allowing policyholders to get prescription drug information, find a doctor and get personalized quotes.

Conclusion

There has never been a better time for Illinois residents to find affordable health insurance coverage. With nationally recognized and award winning companies striving to create affordable, personalized coverage and health care expenses continually rising, health insurance is quickly becoming a necessary expense rather than an optional consideration.