COBRA stands for Consolidated Omnibus Budget Reconciliation Act . This health benefit passed by Congress in 1986 provides continuation of health coverage that might otherwise be terminated in the event of a job loss (Department of Labor). With full medical benefits remaining the same as the group plan, individuals and families can save money by staying on a company plan after employment ends.
COBRA is something people hear about all the time, but do not actually research until they’re confronted with a change in their life or career. That’s what this guide is for! Explore the great benefits of continuation coverage and learn the ins and outs of what it means to qualify for and accept this coverage.
COBRA Continuation Health Coverage: Does the business I work for provide this benefit? Can Anyone Receive This Benefit?
Health care is expensive. Companies bundle insurance plans to save on the overall costs of employee health care. If a company is operating a group health plan with 20 or more employees, that company is subject to COBRA. If you’re an employer, the 20 employees do not all have to be full time. Part time help is counted toward COBRA as a fraction determined by the number of hours of worked divided by the number of hours considered to be full time. 20 is the magic number. The US Department of Labor states that if there are 20 employees covered under group health insurance, qualified beneficiaries can receive the group health coverage after a qualifying event if they were covered by said plan on their last day of employment. Just a quick recap:
Company: All state and local governments, and companies with 20 or more full time employees, must provide COBRA insurance to qualifying beneficiaries.
Three Types of Qualifying Beneficiaries:
Employee covered by group plan on the day before qualifying event.
Spouse covered by group plan on the day before qualifying event.
Dependent child covered by group health plan on the day before qualifying event. Children are considered dependent if claimed on your federal income tax form.
Tip: This only describes who is eligible in the case of a qualifying event. See the next section and find out if that’s you!
Qualifying Events: Who is eligible for COBRA?
Life happens. COBRA is a safety net for qualifying beneficiaries (explained above) experiencing a qualifying life event. Qualifying events are easily broken down to include employees, spouses, and children.
Qualifying Events: If you’re a beneficiary and can answer yes to any of these, you qualify for COBRA Continuation Health Coverage.
Employee:
Did you voluntarily or involuntarily leave your job for reasons other than gross misconduct?
Did you have a reduction in the number of hours worked causing loss of insurance?
Spouses:
Did your spouse voluntarily or involuntarily terminate their job for reasons other than gross misconduct?
Did your spouse have a reduction in the number of hours worked causing loss of insurance?
Did your spouse become entitled to Medicare?
Did you have a divorce or legal separation with the covered employee?
Did your spouse pass away?
Children:
Did you lose your dependent child status under the plan rules (no longer claimed on taxes)?
Did the covered employee terminate employment voluntarily or involuntarily for reasons other than gross misconduct?
Did the covered employee have a reduction in the amount of hours worked causing loss of insurance?
Did the covered employee become entitled to Medicare?
Did the covered employee have a divorce or legal separation?
Did the covered employee pass away?
Hint: Gross misconduct includes any crime that would cause immediate termination (for example, theft).
I’m a qualifying beneficiary with a qualifying event…now what?
After reading the previous parameters for qualification, you’re most likely a little blinded by the restrictions and red tape. But hang in there! If you’re going to lose coverage in the near future, get your ducks lined up and decide if you’re going to use the continuation benefit for you and your family.
Interested? You must notify the plan administrators within 60 days of the qualifying event and have 45 days after electing COBRA continuation coverage to pay the first premium. The channel for communicating COBRA interest varies between plans. In the event of a reduction of hours, firing, or a voluntary exit, the employee will typically meet with Human Resources and discuss COBRA options. If your place of employment does not have a Human Resources department, contact the health care provider covering you on your last day of employment.
Great, I qualify for COBRA continuation coverage. How long does it last and when does it start?
COBRA continuation coverage lasts 18 months and is identical to the group health plan provided before the qualifying event. It begins on the exact date coverage would have been lost. Coverage, however, is not guaranteed. You can lose this benefit if:
Premiums are not paid on time
Employer no longer provides group health plan to current employees (goes out of business).
After COBRA election, beneficiary becomes entitled to Medicare benefits.
Divorce: If, while claiming COBRA continuation benefits, there is a divorce, the divorced spouse that would otherwise lose coverage can remain on the plan for a maximum of 36 months. If this is the case, contact the plan administrator. Remember also if you’re using your divorced spouse’s benefit package, you are entitled to COBRA (see qualifying events).
Extensions: Individuals may qualify for an extension of the continuation coverage if, during the first 60 days, you became disabled.
How much does COBRA continuation coverage cost?
Even if you qualify to receive continuation coverage under COBRA, it certainly is not for everyone. Individuals and beneficiaries are responsible for up to 102% of the total cost of COBRA (the 2% factors in employer administrative fees). You heard right! Not only are you responsible for the premium you paid while an employee, but you are now picking up the employer’s share. That means if you paid $200 a month for benefits and your employer covered the remaining $300, you now owe $500 a month. A common misconception is that the employer must provide health insurance to the employee upon termination. Nope. You pay the way and your benefit is being able to stay on a group plan even though you are no longer employed as a member of the group coverage.
Tip: If you are healthy, it might not make sense to pay COBRA continuation premiums. Many states offer individual plans with catastrophic coverage and high deductibles that can give you very basic coverage, but save you a lot of money while you look for work. These plans will prevent you from losing everything you own to medical bills, but it still might cost you $1,000 if you break your wrist.
Wrap Up
That’s the basic rundown on the COBRA continuation coverage layout, and hopefully you picked up some good information and a couple of helpful tips along the way. While COBRA is not for everyone, it certainly is for some. If you have a preexisting condition, an individual health plan might cost you thousands of dollars a month, but COBRA can give you other options. There are a lot of great befits to COBRA coverage; just remember to think through your circumstances before making a decision.
Be aware of the different options of your health insurance plan, it can save you money in the end.
Shopping for health insurance coverage can get overwhelming given the slew of options available to American consumers. While most already have health coverage from their employers, many others still do not have health insurance. With the passage of the 2010 Patient Protection and Affordable Care Act, they may need to obtain coverage or face a penalty. That’s why purchasing health coverage is in everyone’s best interest.
The first thing you have to consider is what you must have protection against. Injury and illness is a given, as you cannot foretell when these two can befall you. For women, maternity coverage is equally important, even if you’re single and not all insurance providers cover it. If your medical history makes you a possible candidate for diabetes or heart disease, get a plan that covers medical screening for these diseases and other chronic disease like them. The Affordable Care Act of 2010 requires health insurance providers to cover over two dozen preventive care services, including vaccinations, screenings for cholesterol, blood pressure, some forms of cancer, and diabetes.
Try not to “overbuy” health coverage. If you are healthy and strong, you may want to consider increasing your deductible so that you can pay a lower premium. The deductible is that part of the policy which the insured would have to pay out of their pockets. Younger and healthier individuals are not expected to avail of medical services that much so it may be wise to stick to a lower premium and a higher deductible. A high deductible plan would start at $1,000 deductible, and this can save you on premium costs.
Check the health care network in your area. Particularly, you want to make sure that your favorite doctor is part of this network so that you can continue going to them under your insurance policy. Your insurer will have a lower share of the costs if you opt to go out of the network to get medical care. Insurance companies will provide you with a directory of the doctors, hospitals, clinics, and other health care providers included in their network.
Make sure you know your out-of-pocket costs, or the share that will come from your funds in the insurance policy. If you have no idea what a deductible, co-insurance, co-payment, and out-of-pocket maximum is, you should research it first or, better yet, have your agent explain them to you. These terms comprise the portion of the cost of your health care which you will pay for. When you have a minor ailment, the co-pays seem to be small and manageable but they do pile up. And when the time comes when you need to undergo a major medical procedure, you might end up with a share that could be in the thousands of dollars.
Before signing up with any health insurance provider, check their list of formulary. This list contains all the drugs that they cover in the prescription plan. You need to make sure that your drugs are part of this list so you don’t have to pay for them anymore.
At the moment, all health insurance policies come with annual limits, but come 2014 there will no longer be annual limits on all plans and this is thanks to the health reform act. There will still be annual limits for medical services that are not deemed essential. There will be cases when the plan provider would need to obtain a waiver for procedures that they wish to maintain the annual limit on.
If you have children, the health reform law provides that they can be covered under your employer-sponsored health care plan until the age of 26, unless they too have coverage from their employer. Health plans cannot exclude children under the age of 19 from health coverage due to pre-existing conditions. Make sure you are aware of the mechanics of covering your dependents as these underwent major changes when the health reform law was passed.
If you do not have an employer-sponsored health care plan, and would like to obtain health insurance on your own, make sure you consider a number of plans. It really isn’t that hard to understand the plan features offered by different health insurance providers. You can go to the Internet and have a program compute your premium based on your personal circumstances. Just make sure you are comparing apples to apples, meaning the levels of coverage are all the same.
A study commissioned by the state government of California revealed that the federal health reform law can cause health insurance premiums to increase for some sectors. It also suggested that government subsidies will work to offset premium increases for those who are eligible for the subsidies, mostly low-income consumers.
California is the ideal state to commission the study, as it is way ahead of other states in establishing a competitive insurance exchange or “marketplace”. In it, consumers, particularly individuals and small businesses, can purchase low-priced and high quality insurance coverage. Insurance companies will be hard pressed to offer good priced insurance policies offering a high quality of service.
The commissioned study suggests that health insurance premiums can increase to around 30 percent for people with high income who are not qualified to avail of insurance subsidies offered by the government. But this high-income group stands to benefit from their new out-of-pocket limits bringing down the expected increase in premiums to just about 20 percent.
The factors cited in the report for the anticipated higher premiums are many. One major factor is the entry of low-income consumers into the market for individual insurance. Another is the requirement imposed on insurance companies to provide a better quality of health insurance benefits. There are also the new taxes and fees imposed by state and federal agencies on insurance companies that are sure to be passed on to consumers.
Experts believe that the cost of health insurance will be relatively more affordable for people suffering from chronic illnesses, as it becomes more expensive for people who are healthy. It may mean though that those who are quite healthy will decide to drop their health coverage altogether because of the high premium costs. This is certainly not an ideal situation, and goes against the main goal of the health reform law which is to ensure that all Americans have health insurance coverage.
On the positive side, the study suggests that those who are in the low-income group will enjoy considerable reductions in their insurance premiums as well as their out-of-pocket expenses. This is in part due to the tax credits and all the other government subsidies offered to help bring down the cost of insurance. An expected 76 percent decline on the cost of care is expected for people who have insurance now.
The report was commissioned by the state of California to assist the government in assessing the proposals submitted by insurance companies. It was also prepared for use in the development of marketing campaigns aimed at reaching out to consumers. The findings however, appear to find application in most insurance exchanges and states. The state anticipates roughly 5.3 million people will be eligible and qualified to buy health insurance coverage through the state’s insurance exchange by October 2013. Experts are confident that based on the insights revealed by the report, most consumers who are going to purchase insurance through the exchange will have a positive experience.
Like the California report, a study conducted by the Society of Actuaries also suggested that the health reform law will increase insurance costs in the coming years. U.S. Health and Human Services Secretary Kathleen Sebelius admits that the health reform law, particularly the establishment of health insurance exchanges would cause health care costs to rise in the market for individual insurance especially for men and for the younger set. The reform law blocks insurance companies from imposing charges on women more than the men. The law also limits insurance companies from setting higher priced premiums purely on the basis of age.
Republican politicians on the other hand declared that the study conducted by the Society of Actuaries regarding the health reform law validated their initial concerns that insurance premiums for individual policies will increase. The law also dictates that no insurance company can deny health coverage nor impose higher premiums on consumers with pre-existing conditions. Experts say that higher insurance premiums will also be experienced by average consumers who already have coverage as they will fall under a new risk pool. This pool will also include consumers who used to have a hard time getting coverage due to their health condition.
The administration of U.S. President Barack Obama dismissed the premium rate shock fears as overblown. The administration believes that consumers can obtain low-cost health plans that are of higher quality and provide a more efficient system of health care. It also predicts that most of the new consumers that will acquire a health plan through the insurance exchanges will be healthier and younger than the population that is already insured.
All The Different Policies Can Be Confusing, Take a Moment to See What Health Insurance Will Do For You.
One of the major benefits provided by the 2010 Patient Protection and Affordable Care Act (PPACA) is that access to health insurance will be broadened and extended to people who probably never had a chance to obtain this type of insurance. This may be the first time that people will encounter health insurance, so they need to know what it is.
Simply put, health insurance is the kind of insurance that pays for medical and surgical expenses. There are different types of health insurance. Some have the insurer pay the costs of medical services directly to the provider of said services. Other types have the insured pay for these costs from their pocket first and claim for a reimbursement with the insurance company.
The term service provider in health care refers to a doctor, clinic, hospital, laboratory, pharmacy, or any other health care practitioner. The insured is the policyholder or the one receiving the coverage. The insurer is the insurance company providing the coverage. There are countries where universal health care coverage is in place, where the state pays for all the medical services needed by its people, but the U.S. is not one of these countries. Health insurance in the U.S. is typically provided by employers as part of their employees’ benefit package. But anybody can purchase health insurance coverage if they wish too, even those who are already covered by an employer-sponsored health insurance plan.
In countries where health coverage is provided by the state, it is viewed in the same way as education, police protection, public works, and other government provided services. Health insurance is mandatory for everybody. In the U.S., health insurance is viewed in a different way. Health insurance is every individual’s responsibility, except for certain groups such as the disabled, the elderly, or the military veterans. With the PPACA, U.S. President Barack Obama’s administration will make it mandatory for everybody to be covered with a health plan and there will be consequences for those who fail to obtain health insurance.
Medical services are a necessity as everybody will need medical attention at some point in their lives. This type of service cost money and ideally, people who need medical attention should be able to focus on recuperating, and not worry about finding the money to pay for the hospital. This is the beauty of a health insurance plan, as it takes away the worry of raising the money for medical bills. This is particularly true for people who are suffering from chronic ailments like diabetes. These people require continuous health coverage in the long term to properly manage their disease.
There are millions of Americans without health insurance coverage. According to one study, the number amounts to about 50 million, and there are millions more who do not have adequate insurance coverage. Another study suggests that over 26% of working age Americans with gaps in their health care coverage are mostly due to being unemployed or changing jobs. American children are more likely to have access to primary care physicians when compared to children in countries with public insurance. Another significant finding is that emergency care in the U.S. can vary according to the type of health plan the patient has. People suffering from serious ailments in the U.S. have better chances of receiving medical care among all the other developed countries.
Under the Affordable Care Act, children are defined as anyone under the age of 26 years old. This means that people within this age group can continue to receive medical coverage from their parents’ health insurance plans until the age of 25 regardless of their circumstances. Unless of course they opt to receive their coverage from their own employers.
A 2010 survey suggests that the average premium for individual health insurance is at $167 and the average deductible is $2,632. For families, the average premium is at $392 and the deductible is at $3,531.
There are two broad categories of health plans or health insurance coverage — private and public health insurance. A study conducted by the Centers for Disease Control and Prevention reveals that the nation’s health care system relies heavily on private health coverage, as over 58% of the people are on some sort of private health plan coverage. Public health insurance is offered in the U.S. to some degree through Medicare, which is a social insurance program provided by the government for people over the age of 65, the disabled, and people suffering from chronic diseases, such as end-stage renal disease.
Shopping for Health Insurance on Your Own can be Daunting, Find out More about Different Plans below.
Shopping for the right health insurance coverage can be intimidating, whether you are buying on your own or selecting a plan from what your employer is offering you. You will have to deal with all the terminologies that are often times unfamiliar and then there are all the different types of basic and supplemental coverage. The stakes are definitely high as health insurance is probably one of the most important needs that every individual has. Without it, you will be taking on a huge risk that may include not having access to a great number of non-emergency medical services. If you accidentally get hit by a bus, you may find yourself so deep in debt without health insurance. With the developments in health insurance in the U.S., you may also find yourself paying a penalty by 2014.
But choosing the right plan for you is just as important as or even more important than actually having health coverage. Most people are in the dark when they purchase a health plan for the first time and they find themselves paying for this lack of knowledge when the time comes to use their health benefits. With a little reading and self-educating, you may be able to make sense of the entire process of buying health insurance.
If you are getting your health coverage from your employer you need to be aware that it is possible that what your employer has to offer is not the best deal you can have. The main benefit of a health-sponsored plan is that you get a group rate. Sometimes, companies even cover your health insurance one hundred percent. An employer-sponsored health plan will be particularly beneficial for those with pre-existing conditions due to the significantly low group rate. Even if you lose your job, your health insurance will continue under COBRA for at least 18 months. If you are self-employed, there are trade associations that also offer a group plan that you can participate in.
If you are however in good health, you may find that you are better off purchasing health insurance on your own and opting out of the company. This is because in group plans premiums are based on the average health of the group. It would be easy to find the exact same level of coverage being offered by your employer under a group plan for a lower cost. You can do some comparison shopping in any of the multitudes of online sites offering rates and coverage from different insurers.
You may want to enlist the help of an insurance agent if you are purchasing health insurance on your own. Agents can help you look for the best deal as well as guide you as you go through the application which can be a complicated process. A good health insurance agent will check for your COBRA eligibility as well as the other government programs you may qualify for.
If you rely heavily on a family doctor or if you want to maintain your relationship with your current doctor, you may want to check which insurance providers they are accredited with. Keep in mind that health plans offered through a Health Maintenance Organization or an HMO can be quite restrictive and can be limiting in terms of the doctors available to you. They will not cover the costs you incur if you go to a doctor outside of their network. A Preferred Provider Organization or PPO lets you go outside of the network but for a higher cost. A Point of Service health plan or a POS will let you go to a doctor from outside the network but only after securing a referral from the network’s PCP or primary care physician.
The prescription drug coverage may not be able to cover all of your medication. Most plans set limits on alternative medicine and practices such as chiropractic care. Make sure you read all the dollar limits for the coverage as well as all the exclusions and limitations. You should also make a list of all the prescription drugs you take or coverage you will require to be able to counter-check them with the plan you are planning to purchase.
Be aware that the lowest premium does not mean the cheapest plan overall. Insurers offering health plans with low monthly premiums usually make up for it in other areas. You need to familiarize yourself with terms like co-pays, deductibles, co-insurance, and out-of-pocket maximums. These are the costs that will be coming from out of your pocket and they are usually applied to the bill before the health benefits kick in.
On the other hand, having a high insurance deductible is not always a bad thing. While the thought of having to satisfy a high deductible first before the plan benefits kick in may be a little frightening, you can look at it as your savings or your incentive if you have been able to maintain good health throughout the year. A high-deductible plan will also qualify you for establishing a health savings account or an HSA. This is an account that will let you save money pre-tax, which you can apply to your out-of-pocket expenses, tax-free. This arrangement lets you set aside funds for your medical expenses as you bring down your taxes and save for retirement in a tax-deferred account.
With all the options available for buying health insurance, coupled with all the many details that a person needs to know about their health coverage, picking the right health plan will require a lot of education and evaluation. You would not want to get your health insurance coverage wrong especially since you will be stuck with it for a whole year. A good plan is one where you will feel the most comfortable in terms of premiums and out-of-pocket expenses.
The Patient Protection and Affordable Care Act (PPACA) was created perhaps to insure the groups most likely to be deprived from health care. There are millions of working Americans who cannot afford to support themselves and/or family and pay the high premiums of health insurance. Although the federal wage is constantly being raised to meet the increases cost of living, health insurance unfortunately still is not affordable for most.
The group that will benefit mostly are the youth in transition, who are leaving childhood and becoming independent, adult workers. The age group is between 19-25 and one third of them don’t have health insurance. This demographic sometimes finds it hard to make financial ends meet. National groups that work on behalf of the young adults claim that three-fourths of young adults neither qualify for the group health insurance nor can be covered by their parents health plans before ACA became law.
Typically first jobs are entry-level positions with minimum wage. College expenses including books, tuition and other fees are first priority when payday comes. Health insurance takes a backseat to these expenses.
The Affordable Care Act now allows for these hard working youth to be covered under their parents’ health plans.
The California Glitch
The State of California has adopted the insurance plans were children under 26 years old can be included on parents’ policies. In 2011, parents enrolling their children on their plans, who had no other form of health plans, began to increase drastically. However, parents began to see a taxable income increase when their employers expanded their group coverage to add youth until age 26.
Although the federal law exempts such benefits from taxable income, several states like California do not. California has been in works with a legislation that would mirror the federal tax rules. Due to California’s high deficit and budgetary woes, it may be a while before the law can be included in budget.
California insurance plans are aware of this inconvenience that parents are under. The Tonik Plan is specifically for young adults under age 30. This plan is only for those without pre-existing conditions. This plan is only temporary as the Affordable Care Act will be fully instated and voids selling of this plan.
Health care reform will disallow insurance companies from denying coverage to those over age 18 with pre-existing conditions. This will take effect in 2014. Knowing all the options available can be a daunting task for parents. However, the Tonik plan is a great alternative option to making sure the youth are protected.
Having health insurance is so incredibly important. If you fall ill or are in need of major medical care, you want to be certain that it is paid for. However, solo entrepreneurs are not going to get their insurance through businesses, so what options are available for them?
A Spouse’s Insurance
If you are a solo entrepreneur who is married, then you need to consider going onto the plan of your spouse. If he or she is unable to afford having you on there, then you might offer to pay a little bit of money. After all, funds are not coming out of your paycheck for insurance. Generally, businesses are certainly going to allow you to go onto your spouse’s insurance policy. Be sure that you are not just getting married for insurance!
Your Parents’ Insurance
Depending upon how old you are, as well as whether or not you are still in school, you might be eligible to go on your parents’ insurance plan. Now, if you are mature enough to start a business by yourself, then you are certainly old enough to make sure you are providing your parents with the appropriate amount of money for the insurance plan. Find out for how long you are able to be on there. In any case, it will probably cost less than buying your own insurance plan.
Purchase Your Insurance
When neither of these aforementioned methods work out for you, you can look into buying your own health insurance. A few different possibilities exist, but COBRA is one of the most popular options that a lot of people will purchase. COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1985. However, whenever you are looking for it in, you are likely just going to search for COBRA. Other options are available too if you are not particularly interested in this one. Remember, you will also need dental insurance, and you might need insurance for the eye and ear doctor as well.
Find a Clinic
Now, what should you do if you do not have insurance at all, and you are not able to buy any at this current time? Well, you still need to have your medical needs taken care of. In or near many communities, you will find clinics that offer healthcare services for people who are not able to pay large sums. You absolutely need to look into these entities in order to ensure that they are safe and clean. You do not want to spend any more at all to go to a place where you might be injured or become ill because of the practices employed.
Being a solo entrepreneur can really be fun, and you will certainly have the opportunity to explore some very specific interests of yours. Of course, you’ll be making money along the way and that is probably a major reason why you began this undertaking in the first place. Still though, you want to make sure you have appropriate health insurance.
Health Insurance Costs Can Be Controlled Through Lifestyle Choices
The term “lifestyle choices” can refer to so many different topics, and it can seem to be an extremely broad field to cover. However, we can narrow down some specific lifestyle choices you can make to keep the cost of health insurance lower.
Your Job Situation
Of course, your job is often going to come into play when discussing health insurance. What should you do if you are not receiving health insurance from your place of employment and you really are unable to afford your own plan? Well, you might need to start searching for other jobs. Of course, if you are planning to get married soon, then you will likely be able to get your spouse’s health insurance. Still, in some cases, the only option is to take on a different job.
Picking Moderate Plans
You might be a person who loves to spend money and who loves to have the best of everything. First of all, look at what it is that your employer is providing. Before you say that it isn’t good enough of a plan and decide to buy your own pricier policy, do your research. Do not judge something on face value. Furthermore, determine if everyone in your family really needs everything. For example, if your spouse has no sight or hearing issues, you don’t need to add him or her to that policy at this specific time. Just make sure you can do so in the future if necessary.
Maintaining Physical Health
Of course, your health insurance plans are going to cover quite a bit of the money that is spent on you for medical necessities. However, it does not necessarily cover everything. Furthermore, your co-pays can be significantly higher for special doctors. Do your best to take care of your body. If you have to be rushed to the emergency room on a regular basis because you do not take your medications or something of that nature, you can wind up costing yourself quite a bit of money.
Maintaining Dental Health
If you lucky enough to get dental health from your employer, then it’s wise to take advantage of it. However, even with insurance, dental repairs and surgeries can cost hundreds and even thousands of dollars. Therefore, you need to work on keeping your teeth healthy and clean. Since you have that dental insurance, take the first step and make an appointment with your dentist today. If you do not have a dentist, you can certainly get a recommendation. Letting your teeth go to waste does not only affect your oral health, but it can also cause some major problems for your body as well.
Part of reducing health insurance costs involves making savvy financial decisions for yourself, and the other part involves ensuring that you are taking necessary steps to make certain that your body stays in optimal condition. When you are able to prevent frequent trips to special doctors or to entities to have surgery performed, then you can start to save some money.
HDHP was Created to Deal with the Rising Health Care Costs By Reducing the Amount of Premiums Paid.
You may have already heard of high deductible health plans (or HDHPs), especially if your health plan is employer-provided. With the enactment of the Patient Protection and Affordable Care Act, employers have been trying to deal with rising health care costs by encouraging their employees to opt for an HDHP in order to reduce the amount of premiums paid for health plans.
As the name suggests, a high deductible health insurance plan comes with a high deductible. This is the component of the insurance contract that must be satisfied first before the benefits start to apply. This portion is paid by the insured on top of co-insurance and co-pay, and all the other out-of-pocket expenses built into the policy. The deductible is considered high starting at $1,200, and it can go to as high as $10,000. With high deductible health plans, companies can save on premium costs by as much as 50 percent.
HDHP is designed to encourage consumers to become more involved in the decision-making process when it comes to seeking medical services precisely because they have a bigger financial stake on the cost of these medical services. In a sense, it encourages consumers to take better care of their health knowing that they would have to shell out a higher amount of money in the event that they require medical services. The prudence practiced by the consumer will translate to a lower health care cost for everyone in general. To illustrate, a consumer may opt to go to a medical clinic instead of the emergency room where they may be charged double. In other words, the consumer will be more inclined to choosing the more affordable option when obtaining medical care.
On the downside, HDHPs may push the consumer into avoiding medical care altogether which may not be a good thing if they do have a serious medical condition requiring attention. A 2011 study published by the RAND Corporation suggested that while HDHP did bring down health care costs for the plan administrators, there was also a significant reduction in availing preventive care by consumers with a HDHP. It was also found that HDHP holders are reducing their spending on medical care to their own detriment.
There are a number of ways by which employers reach out and assist their employees who are on an HDHP. One way to provide assistance is to absorb some of their employees’ out-of-pocket expenses as the deductible remains unmet. Employers also offer Health Savings Accounts or Flexible Spending Accounts where employees may be able to save funds on an account that can be used to pay for medical and other expenses tax-free. To make it easier for employees to maintain the account, the savings that go into it are automatically deducted from their salaries. Some employers offer HDHPs that provide preventive care that is not subject to the deductible.
In a business enterprise, the younger and healthier employees would benefit from HDHPs, especially if they avail of the health savings account offered by their employee. This could mean tax reductions plus a ready fund that they can tap into when paying their out-of-pocket expenses. It may not be a great idea for employees with pre-existing conditions or those who use their health plan often as the cost of the deductible could impact them financially. Older employees usually have growing families that means higher expenses. If you are in the latter group and being offered an HDHP by your employer, be sure to check if they also offer a health savings account to be able to offset some of their medical expenses and to bring down their taxes as well.
HDHPs come with their own set of advantages and disadvantages. Many people use it to realize significant savings in tax payments. Many are also in agreement with their employers that having a lower premium is indeed better than having a low policy deductible especially if they are not really using their health plan all that frequently. These plans will also encourage consumers to make more intelligent health choices and take good care of their health. It may be a good thing to read about HDHP to see whether it is a good fit for you. There are a number of online resources offering information on this plan.
When Choosing Health Insurance, It Is Important To Shop Around, Getting Free Quotes Online is a Smart Way to Find the Best Plan For You.
Shopping for the right health insurance coverage can be intimidating, whether you are buying on your own or selecting a plan from what your employer is offering you. You will have to deal with all the terminologies that are oftentimes unfamiliar and then there are all the different types of basic and supplemental coverage. The stakes are definitely high as health insurance is probably one of the most important needs that every individual has. Without it, you will be taking on a huge risk that may include not having access to a great number of non-emergency medical services. With the developing health insurance in the U.S., you may also find yourself paying a penalty by 2014.
But choosing the right plan for you is just as important as or even more important than actually having health coverage. Most people are in the dark when they purchase a health plan for the first time and they find themselves paying for this lack of knowledge when the time comes to use their health benefits. With a little reading and self-educating, you may be able to make sense of the entire process of buying health insurance.
If you are getting your health coverage from your employer you need to be aware that it is possible that what your employer has to offer is not the best deal you can have. The main benefit of a health-sponsored plan is that you get a group rate. Sometimes, companies even cover your health insurance one hundred percent. An employer-sponsored health plan will be particularly beneficial for those with pre-existing conditions due to the significantly low group rate. Even if you lose your job, your health insurance will continue under COBRA for at least 18 months. If you are your own boss, meaning you are self-employed, there are trade associations that also offer a group plan that you can participate in.
If you are however in good health, you may find that you are better off purchasing health insurance on your own and opting out of the company. This is because in group plans premiums are based on the average health of the group. It would be easy to find the exact same level of coverage being offered by your employer under a group plan for a lower cost. You can do some comparison shopping in any of the multitudes of online sites offering rates and coverage from different insurers.
You may want to enlist the help of an insurance agent if you are purchasing health insurance on your own. Agents can help you look for the best deal as well as guide you as you go through the application which can be a complicated process. A good health insurance agent will check for your COBRA eligibility as well as the other government programs you may qualify for.
If you rely heavily on a family doctor or if you want to maintain your relationship with your current doctor, you may want to check which insurance providers they are accredited with. Keep in mind that health plans offered through a Health Maintenance Organization or an HMO can be quite restrictive and can be limiting in terms of the doctors available to you. They will not cover the costs you incur if you go to a doctor outside of their network. A Preferred Provider Organization or PPO lets you go outside of the network but for a higher cost. A Point of Service health plan or a POS will let you go to a doctor from outside the network but only after securing a referral from the network’s PCP or primary care physician.
The prescription drug coverage may not be able to cover all of your medication. Most plans set limits on alternative medicine and practices such as chiropractic care. Make sure you read all the dollar limits for the coverage as well as all the exclusions and limitations. You should also make a list of all the prescription drugs you take or coverage you will require to be able to counter-check them with the plan you are planning to purchase.
Be aware that the lowest premium does not mean the cheapest plan overall. Insurers offering health plans with low monthly premiums usually make up for it in other areas. You need to familiarize yourself with terms like co-pays, deductibles, co-insurance, and out-of-pocket maximums. These are the costs that will be coming from out of your pocket and they are usually applied to the bill before the health benefits kick in.
On the other hand, having a high insurance deductible is not always a bad thing. While the thought of having to satisfy a high deductible first before the plan benefits kick in may be a little frightening, you can look at it as your savings or your incentive if you have been able to maintain good health throughout the year. A high-deductible plan will also qualify you for establishing a health savings account or an HSA. This is an account that will let you save money pre-tax, which you can apply to your out-of-pocket expenses, tax-free. This arrangement lets you set aside funds for your medical expenses as you bring down your taxes and save for retirement in a tax-deferred account.
With all the options available for buying health insurance, coupled with all the many details that a person needs to know about their health coverage, picking the right health plan will require a lot of education and evaluation. You would not want to get your health insurance coverage wrong especially since you will be stuck with it for a whole year. A good plan is one where you will feel the most comfortable in terms of premiums and out-of-pocket expenses.
