Health Risk and Health Insurance Challenges Are Top Priorities For Families

Health Risks borne by families is a daily news event.  Why?  What has happened?
If you are one of the insured, you have probably been on the receiving end of some pretty large surprises each year as your employer shares the cost of increasing premiums with you.  If you are one of the fifty million US citizens without health insurance you live with the daily uncertainty of what will happen if you  or your family truly needs care?  This article begins a three part series on health insurance.

Health insurance premiums have risen, by some reports over fifty percent in the last five years.  Real incomes have only risen less than 10% in the same period.  Actual health care costs in some sectors are experiencing double digit cost increases annually, and projected to continue this trend for the next decade.   Other trends contributing to the crisis include longer life, more expensive pre-death health challenges, and the high costs of addressing medical mal practice.  Some would call this a true crisis.

What do you need to know about Health Care as it relates to your needs?

If you are covered by an employer sponsored plan, you are ahead of many of your fellow citizens.  However, not all plans are created equal, and your choices related to your plan can have a significant impact on your access to needed coverage.

What Type Of Plan Do You Have?
Is your plan a Managed Care Plan or Private Care.  In managed care, the organization typically selects and contracts with the health care providers to provide certain services within certain price ranges.  In Private care, you choose your health care providers.  A Health Insurer typically issues a policy for a premium that pays for a percentage of the care provided, but is not involved in delivering the care.  A Health Maintenance Organization (HMO) is a hybrid;  It offers a policy, and contracts for services for its policy holders.  This hybrid typically provides basic health care at the least expense, but it is also the least flexible approach to obtaining health care.  A Preferred Provider Organization ( a PPO) is typically a loosely, but contractually organized confederation of health care providers, that a PPO benefit client chooses from in the process of obtaining the health care required.  Generally the PPO is separate from the Health Insurer, who sets the rates and deductibles on the policy based on the general rates charged by the associated PPO practitioners.

What are the Features of Your Plan?
To understand the features, it is sometimes helpful to explain three important terms:  Co-pay, co-insurance, deductibles, and limitations on features.  

A co-pay is a charge paid by the insured for every interface with the health care providers.  The co-pay may vary depending on the level of care, ie.  Different for an office visit or an emergency room visit.  If you have a $40 co-pay, you will be responsible, normally at the time of the appointment to produce a payment for the $40 responsibility.  The medical practitioner will then typically spend the next two to three months being paid by your provider.
Co-insurance is the amount you are going to pay above and beyond the co-payment responsibility.  For some policies the co-insurance is 20% or $2000 of the first $10,000.  The higher your share of co-insurance, the lower your cost for insurance premiums.  The co-insurance vulnerability or risk is normally capped at a certain amount per year on a multi-family member policy.  Ie.  For four family members the cap might be $2000 co-insurance per person, but capped as a family at $4000.  

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The deductible is different than the co-pay or co-insurance.  The deductible represents a minimum amount beneath which the insured will pay 100% of the costs of the health care received.  So to summarize the integration of these, if you have a $1000 deductible, $40 co-pay, with a 25% co-insurance up to a cap of $10,000, you are liable for:
    The first $1000 of health care costs.
    $40 or as determined for each office visit or procedure for co-payment.
And a total out of pocket for the co-insurance prospective liability of 25% of all costs up to a cap of $2500 per annum.

The Features of the Policy, in addition to setting the above referenced costs and obligations may include:  Drug coverage, preventative care provisions, maternity coverage, emotional illness treatment, and optional but not critical surgery determinations.

The amount you pay for your plan will typically increase by the addition of features, and the lowering of co-pays, deductibles, and your exposure to the co-insurance.  When you raise the amount you are willing to be responsible for, you typically save money each month.  Your family situation may encourage you to spend the money for the extra coverage if you have several young children at home and your family may add a baby at any time.  On the other hand, you may wish to raise the deductibles, the co-pays, and the co-insurance if you are beyond the need for maternity coverages, your children are grown, and you are in relatively good health.  You might then combine this strategy with a medical savings account.  The next article addresses strategy to control costs.

Spend the time necessary to actually read and review your policy.  Often your employer will have an appointed advisor on staff or the insurance company will provide one to assist you in understanding and selecting your best alternatives under the plans provided.

Next Article:  How Do I Keep My Health Insurance Costs Contained?

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