Health Insurance
Health Insurance is Designed to Keep Your Medical Costs under Control
Health care has gotten extremely expensive in the United States and strangely health insurance - in addition to malpractice costs - is one of the reasons why. For some reason, people would rather have someone else direct their health care, while having no idea what it actually costs.
It used to be that all but the poorest could go to a doctor or hospital and pay their own way. Then employers started offering health insurance as a job benefit. The government got into the act, and now even group health insurance is getting pricey, which is why coverage is going down and deductibles are going up.
But there is no denying that health insurance is vital, but expensive.
This is an oversimplification, but basically the way health insurance works is that you pre-pay your potential medical costs. The money is pooled and earns interest.
The insurance companies then make contracts with doctors and hospitals to accept certain amounts for certain procedures. In HMO plans, the doctor might accept a monthly or yearly payment from the HMO, for each patient enrolled, which he keeps whether the patient visits him or not.
The basic idea is to gather a lot of money, let it grow and on the outgo side, negotiate lower fixed rates for medical procedures than the market might otherwise allow.
Lots of younger healthy persons are not buying health insurance these days. They figure they don't need it and if something does happen, somebody in the vast welfare system that exists in the states will take care of them.
This causes some problems for the rest of us. First health insurance premiums are more expensive for the rest of us, since the pool of premiums is mostly coming from older and less healthy folks.
One of the basic foundations of the system is missing - the pool of money from people who are unlikely to make immediate claims. There is less money to grow.
When an uninsured person walks away from a hospital or doctor bill, he will be pursued for repayment of the debt. If the health care provider is unsuccessful, he adjusts his bills for those who do pay upward to cover the losses he sustained from the non-payers.
Finally the government gets into the act. It requires health insurers and HMO's to provide coverage for "alternate health care", experimental services or for procedures specifically excluded from coverage. They also try to control costs in various ways. All in all government intervention just makes things worse.
Fortunately for consumers, there is a myriad of different health insurance policies, so that you can tailor a plan that's close to what you need and can afford. You have standard Blue Cross type policies, HMO's, PPO's, major medical policies, etc.
In spite of dwindling coverage, employer health insurance benefits are the first place you should look for coverage. Most major employers have "cafeteria" benefit plans that let you pick and choose among various options. Once the employer's contribution is used up, you have to make up the difference, but this is still likely to be cheaper than buying the same coverage on your own.
If you don't have employer coverage, consider the relatively new Health Savings Accounts. If they are for you, they come with some pretty substantial tax benefits.
No matter what health insurance plan you decide on, shop around. Use services such as eHealth Insurance to compare plans and prices online.
If you do have a health policy that has a cap, say $5,000,000, consider a $5,000,000 deductible major medical policy with no cap. Because of the high deductible, these policies are not terribly expensive.
Cancer, neo-natal care, organ transplants and other chronic diseases can eat up $5,000,000 quickly. Look for a major medical policy with low or no deductibles and full coverage.
As you get older you have to deal with Medicare, gap coverage, drug coverage and more.
Frankly I know very little about these plans. The Social Security Administration can fill you in.
Health Insurance Considerations
One of the major causes of bankruptcy in the US is medical expenses. To make matters worse a lot of these people thought they had sufficient health insurance.
Here are some things to consider for if you have insurance and don't want to get into financial trouble:
First read your policy. I know it lots of small print in legalese - although today more states are requiring policies to be written in simple English. You have to read the policy to know what coverage it provides, what is excluded and what you have to do to get coverage.
Representations by a salesman or features listed in a glossy sales brochure are not what govern. You need to read and understand the insurance contract.
There will be rules listed that you must follow, for example the need for pre-authorization. If you ignore these rules, you do so at your peril.
If you policy says you need pre-authorization, get it. Don't assume that medical necessity makes this requirement unnecessary.
While the policy will usually cover emergency services, you or someone on your behalf must get authorization for the rest of your treatment.
If pre-authorization is required, ask your doctor or hospital if they received it. If they haven't make some calls to your insurer.
Are you assigned a primary health care provider? If you need a specialist, do you have to get a referral from your primary doctor? Do you need pre-authorization for treatment by a referred specialist?
What are the limitations on coverage? Is there a limit to the amount of times you can receive certain treatments? Is there a limit on how much the insurer will pay for a treatment?
Most carriers pay what is called a "reasonable and customary fee." Do you know what that means?
If you go to a out-of-network doctor for an emergency appendectomy, which would be covered by most policies, the doctor's bill might be $4500. However you carrier might consider the reasonable and customary fee to be $1000. You are responsible for the difference.
Reasonable and customary fees for the most common procedures should be spelled out for you somewhere. This is the amount the doctors and hospitals that deal with the insurer usually agree to accept.
But if you pick a provider who charges more, even with pre-authorization, you might have large out of pocket expenses. So it pays to ask beforehand.
What are your deductibles and co-pays? How much is the maximum you and your family can be out-of-pocket in any given year? If you can't come up with the money, you need a better policy.
If you have drug coverage, you might find that it only pays for generics. Your insurer will provide you with a list of approved drugs and how much they pay for each? If you are prescribed the latest wonder drug, you may find it's not fully covered.
As far as drugs and other medical appliances go, your doctor can be a big help in persuading the insurer to part with the extra bucks for better drugs, a motorized wheel chair, a hospital bed rental, etc.
Finally be aware of your appeal rights. They are generally limited to less than a year. If you disagree with your insurer's decision and want to fight it, make sure you follow the procedures spelled out in the policy.
January 2011 Update
Last year the Democrat contolled Congress enacted "Obamacare" on a partisan basis. This bill, if allowed to stand, will eventually lead to the death of private health insurance.
27 states and other organiztions have filed constituional challenges against the law and so far one, Virginia, has been successful.
Other states have filed objections based on the costs the law will shift to the states.
The new House of Representative have voted to repeal the law and the Republican minority is trying to force a vote in the Senate.
Meanwhile, although the law has not been fully implemented, over 700 unions and businesses have obtained temporary waivers from the law.
It looks like the law cannot be implemented in its present form and likely will eventually be repealed and replaced with something else. Until that is done, any discussion of health insurance is really meaningless.
Long Term Disability Insurance
