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Health Insurance Guide
Where To Start Looking For The Best Low Cost Individual Health Insurance Plan
Having decided upon the type of health insurance plan that will best suit your needs (an indemnity plan, managed care HMO or hybrid managed care PPO or PPS) the next step in tracking down a good low cost health insurance self pay plan is to ensure that you fully understand just how the cost of a health insurance plan is made up. The majority of people will begin by looking at the monthly premium, but this is just the starting cost and not the final cost of your plan.
The total cost for any health insurance plan is made up of several elements and you have to understand just what each element is before you begin looking at low cost health insurance quotes and working out just what you are likely pay in the end.
The first charge is the monthly premium and a common mistake is to be put off if this seems to be very high as this is one element of your plan which can be adjusted as we will see in a minute. One thing you should know though is that some companies will offer a low premium to entice you into buying the plan. This "special offer" will normally only apply to your first year premiums and your premium will then increase markedly for the second and subsequent years.
The second charge is the deductible. This is a fixed sum of money that you will have to pay out of your own pocket every year before your insurance company will meet the cost of any claim. It is particularly important to remember that the deductible is applied to each year of the policy’s life and that, having met the deductible this year, you will have to start all over and meet it again next year and in subsequent years.
In the majority of cases insurance companies will offer considerable flexibility in the deductible attached to a policy, with a low deductible resulting in you paying higher monthly premiums and a high deductible producing lower monthly premiums. In general, it is a good idea to set your deductible as high as you can reasonably afford to keep your premiums low but you will have to consider your likely requirement to claim on the policy as there are situations in which setting the deductible as low as possible and paying higher premiums may be to your advantage.
The next two charges applied to your policy are co-payments and co-insurance. These are basically the same things but each will affect the cost that you end up paying quite differently.
A co-payment is a fixed sum of money that you will be required to pay before the insurance company will meet the cost of each specific bill. You might, for example, be required to pay $8 towards the cost of every visit to your doctor and $5 towards the cost of every prescription issued.
A co-insurance works in the same way except that, instead of paying a fixed amount of money, you pay a percentage of each bill.
Co-payments and co-insurance will vary between plans and may be applied to only certain bills. In some instances the payment required might also be set as low as $0 or 0%. The important thing to look out for here is that co-insurance especially can very quickly build into a large sum of money and you need to consider this carefully when assessing the likely cost of a plan.
All health insurance policies will provide are designed to provide an overall level of protection for both the insurance company and the policyholder and this is one element which is frequently overlooked.
The insurance company will protect its own interests by placing a ceiling on the amount of money that it will pay out over the life of a policy and this is known as the lifetime payout provision. This is normally stated in terms of millions of dollars and when you are young and healthy it may seem like a fortune. When a catastrophic event occurs or major illness strikes however it can very quickly become a significant issue.
You will have to use your own judgment here but, as a general rule, a policy with a lifetime payout of less than $1,000,000 is probably not worth the paper it is written on. In fact, many people would argue that a figure in the region of $2,000,000 should be your absolute minimum today.
The insurance company will also provide protection the policyholder by placing a limit on the maximum amount of money that the policyholder will be required to pay in any one year. This is called the out-of-pocket maximum and, once reached, the insurance company will meet the full cost of any further healthcare bills in the year in question.
This out-of-pocket maximum is particularly important and you should not accept a plan with an out-of-pocket maximum which is greater than you can afford to pay. It is sad but true that far too many people fail to pay enough attention to this and there are more bankruptcies in the United States today caused by problems in meeting medical bills than for any other reason.
Capitation: A method of paying for healthcare services on the basis of the number of patients who are covered for specific services over a specified period of time rather than the cost or number of services that are actually provided.
Lifetime maximum benefit amount: The maximum dollar amount set by an MCO that limits the total amount the plan must pay for all healthcare services provided to a subscriber in the sub-scriber's lifetime.
Premium: A prepaid payment or series of payments made to a health plan by purchasers, and often plan members, for medical benefits.
Withhold: A percentage of a provider's payment that is "held back" during the plan year to offset or pay for any cost overruns for referral or hospital services. Any part of the withhold not used for these purposes is distributed to providers.
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