Understanding Health Insurance

Understanding Private Pay vs Single Payer Insurance and Disability

Insurance can be bought for almost anything you can imagine. For the purposes of this blog, we are focusing on individual insurance and the insurance everybody needs. I am licensed in life, health, property, and casualty.

Single payor health insurance/socialized medicine

Most controversial of all insurance, creating many debates. Should we have a private system or a single payer system. We will discuss the arguments on both sides.

Socialized healthcare is when everyone gets healthcare, and it is paid through taxpayers’ dollars.

With socialized medicine the government runs everything, the care, and the facilities. The Veteran's Administration is an example. Medicaid and Medicare are all single payers, but the government doesn’t control the care or facilities.

Those arguing against socialized medicine comes from the fear of long waits and sub-standard care. It is a legitimate concern.

I have experienced Medicaid in Utah, I didn’t have long waits and it wasn’t substandard care, but there are many things it didn’t pay for, that private coverage would have paid for.

Medicare is a little different. Caring for my uncle and my mom, I learned a lot about Medicare. If you were poverty level and had no retirement account or savings you could have Medicare and MassHealth (Medicaid) together, which would pay for nearly everything. For what it didn’t cover you could add additional coverage to add to Medicare. You could choose an Advantage or Supplemental.

The Advantage plan will cover what Medicare won’t cover. The insured pays a monthly premium and copays. The premium is determined on an individual basis. Usually, it is under a hundred dollars a month, and there are no deductibles. After the Advantage plan pays their portion, the insured pays what is left on the balance.

The Supplemental premium is usually over a couple of hundreds, it is determined by determined on an individual basis. There are no other costs for supplemental insurance. The only expense is the monthly premium. No deductibles, no copays, no other fees.

Prescriptions do not count as medical care, but if you add that coverage, it can save thousands. My mom paid $38 dollars extra a month for this coverage. Her co-pay for a $3000 dollar prescription only came to $9 a month.

Affordable Care Act (ACA)/Obamacare

Most bankruptcies in America are due to medical expenses. Although ACA lowered the number of bankruptcies by making healthcare more affordable, it is still one of the major reasons for bankruptcy.

It is not socialized or universal healthcare. It is not run by the government; it doesn’t provide for the care or the facilities.

Before ACA health insurance, companies could decline coverage to people that were high risk, either because they had a preexisting condition or cancelling a policy because they developed a costly medical condition, leaving those to pay for all medical costs themselves.

Through ACA people can no longer be denied because of preexisting conditions, you can’t be charged more, and you can’t be cancelled. What ACA did was make the premium more affordable and available to more people.

The cost of deductibles, copays, and balances of medical after insurance payment is still too high for those who suffer from severe medical condition or injury especially if they couldn’t work because of it. Until our country can resolve the cost of these things, medical expenses are still too costly for most people.

ACA premiums are determined by income. The silver plan is not to exceed 8.5% of your income.

Private Pay

Private insurance companies sell healthcare insurance to potential insureds and are not run by the government.

Those that do not like private pay is because of the cost of the insurance, making it unaffordable for many. A concern that too many people do not qualify for Medicaid and do not have jobs that offer health insurance and when they do, the cost is more than they can afford, putting people on a financial position of deciding between a roof over their head and food, or healthcare.

The premiums are determined by age, location, use of tobacco, category of the plan, and dependents and their ages.

Health Maintenance Organization – HMO

With HMO’s there is the least amount of freedom to choose health care providers and if you go outside of your network, you may be paying for your entire bill.

Most insurance the deductible must be met before the insurance pays, except for preventative care. Deductibles vary by plan.

Co-pays are a flat fee that is paid by you when you get medical care.

Coinsurance is a percentage that you pay towards your health care, and it goes towards your deductible. This also varies by plan.

There is very little paperwork to fill out and no claim forms.

Preferred Provider Organization – PPO

The premium, deductibles and co-pays/coinsurance are the same as an HMO. With the PPO, however, you have more freedom to choose providers and you can use providers out of network but may be charged a higher amount.

Catastrophic Plan

Are most suitable for younger people who have no health issues and do not need to visit the doctor often.

Three visits to the doctor’s office are allowed before the deductible kicks in.

Deductibles are excluded from preventative care and the premiums are low. Otherwise, they are extremely high. It can be in the thousands. Even over 10k for families.

High Deductible Health Plan - HDHP or Heath Savings Account - HSA

Like a Catastrophic Plan, you will pay less for your premium, but the deductible is high. You can choose between an HMO, PPO, EPO or POS. Will pay 100% after out-of-pocket expenses are met. With an HAS money can be put into the account tax free and used for qualifying medical expenses. Must be qualified or the money will be taxed. No co-pays or coinsurance, all costs are applied toward your deductible.

Contributions are capped according to individual or family.

Exclusive Provider Organization EPO

Some ability to choose healthcare providers than an HMO. Some EPO’s have deductibles. Premiums are lower for these plans than other plans. Nothing is covered out of network.

Point-of-Service POS

This is a blended form of the HMO and the PPO, with a wider choice of health care providers. Premiums are lower. Deductibles may be required before insurance pays. There is a little bit of paperwork involved to see outside of network providers.

How to understand Bronze, Silver and Platinum Healthcare coverages

When choosing one of the mentioned health care plans you will also choose additional coverage. The lower the coverage the lower the premium, the higher the coverage, the higher the premium.

  • Bronze covers approximately 60% of health care costs
  • Silver covers approximately 70%
  • Platinum covers approximately 90%

Choosing Affordable Healthcare

Look closely at what is covered and not covered, including prescriptions. Be careful of in and out of network insurance plans. Don’t be “penny wise, dollar foolish” It may cost more to buy a health plan with a lower premium because your deductibles, copays and coverages may have more out of pocket expenses. Factoring in these costs.

When buying health Insurance look for the best deal. Employers don’t always offer the best deal and now with ACA you can compare your employer’s health care with the marketplace.

Sometimes the marketplace is cheaper especially if you're low income. If you do not qualify for Medicaid, you still might qualify for a reduced amount based you’re your income, making it less expensive than what your employer might offer.

Other sources for healthcare: healthcare.gov, healthinsurance.com, insuremonkey.com. ehealthinsruance.com, healthplanone.com. National Association of Health Underwriter’s website.

Long Term Disability

Many people think they don’t need disability. They don’t consider accidents or a medical condition that could change their life forever. Forcing them to sell their homes, depleting their retirement accounts and possibly having to file bankruptcy.

People are more likely to have a disability before the age of 65 than dying before 65. The cost is between 1% - 3% of your income, covering up to 60% of your income. Long term disability insurance can range anywhere from two years up until retirement.

The cost is minimal compared to what could be lost without it. It just isn’t worth the risk.