Understanding the Basics of Health Insurance

Single-payor health insurance or socialized medicine are not the same.

Most people use the terms interchangeably without knowing the difference. It is a controversial subject creating many debates. Understanding the basics of health insurance is important, not only before purchasing health insurance but when congress creates new bills to make changes to health insurance.

What is Socialized Healthcare?

Socialized healthcare is when everyone gets healthcare, it is paid through taxpayers’ dollars and the government controls the care and the facilities. The Veteran's Administration is an example. The government controls everything.

Those that are opposed to socialized medicine are because of the long waits and the belief that it is sub-standard care.

What is Single-Payor Health Care?

Medicaid and Medicare are all single-payor programs, not socialized medicine. The government doesn’t control the care or facilities.

I have never experienced socialized medicine, so for that reason I am fairly neutral. When I used Medicaid in Utah or MassHealth in Massachusetts they were considered single-payor programs. I didn’t have long waits and it wasn’t substandard care. However, it didn’t pay for everything that private coverage would have paid for.

In Massachusetts, Medicaid is called MassHealth. If you are over 65 years old and have no retirement account or savings, you would not only have Medicare but would also qualify for MassHealth. In other words, MassHealth would serve as supplemental health insurance plan which pays for what Medicare doesn't.

Medicare, Advantage Plans, and Supplemental Plans

For those on Medicare that do not qualify for MassHealth, you could purchase additional coverage to add to Medicare. The two popular coverages are an Advantage Plan or Supplemental Plan.

The Advantage plan covers what Medicare won’t cover, but consequently you will still have fees to pay.

Anyone with an Advantage Plan will pay 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.

With the Supplemental Plan your only expense is the monthly premium. No deductibles, no copays, no other fees. The premium is usually over a couple of hundred dollars, it is determined on an individual basis.

Prescriptions do not count as medical care, but you can add prescription coverage, and 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

Obamacare 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 (Obamacare) health insurance, companies could decline coverage to people that were high risk. For example, if you had a preexisting condition or costly medical condition, your policy could be cancelled. You were then responsible to pay for all medical costs yourself.

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

Once ACA was passed people can no longer be denied because of preexisting conditions, be charged more, and can’t be cancelled.

What Obamacare did was make the premium more affordable and available to more people. However, those who suffer from severe medical conditions or injury may not be able to work, making it difficult to pay for insurance, or deductibles.

The cost of deductibles, copays, and balances of medical after the insurance pays, are still too costly for most people. On the other hand, those who qualify for MassHealth do not pay any of those fees.

Private PayHealth Insurance Card

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

Monthly fees for all forms of insurance are called premiums. Health insurance premiums are determined by age, location, use of tobacco, category of the plan, and dependents and their ages.

Those that do not like private pay are because of the cost of the insurance, making it unaffordable for many, putting people in a financial position to decide between shelter, having food to eat, or healthcare.

Health Maintenance Organization – HMO

HMO’s offer the least amount of freedom to choose health care providers. If you go outside of your network, you may be paying for your entire bill.

For most insurance plans 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 or in other words, pay at the doctor's office.

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 HSA 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 health care plans mentioned, 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 but your deductibles, copays and coverages may have more out of pocket expenses. Factor 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 considered 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.govhealthinsurance.com, insuremonkey.com. ehealthinsruance.com, healthplanone.com. National Association of Health Underwriters 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 for 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.

Understanding the basics of health insurance can either save you thousands or cost you thousands if you have the wrong plan. This is why it is important to know what you are buying.