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Health Insurance

Offsetting High Medical Costs

Medical emergencies and doctor visits aren’t usually cheap, and medical expenses are a major cause of consumer debt. Health insurance is an option to help cover these expenses and minimize out-of-pocket medical costs. In addition to emergencies, health insurance can cover preventive care too, which enables you to stay healthy through regular checkups. With health insurance, you will quickly learn that not every expense is fully covered, and many expenses require that, in addition to your premium, you pay a deductible or a co-payment.

Three Basic Types of Health Coverage

1. Employer/Group Coverage

This health insurance is known as a company “benefit,” employers commonly offer health insurance plans to their employees. The employer purchases a group plan and eligible employees, and their families are offered health insurance at a discount, or completely covered cost. This benefit only applies to the premium dues. Medical coverage and employee/family out-of-pocket costs for services will vary per plan. The discounted rate of group coverage is a perk; however, these plans are not specific to the needs of the individual. Policy changes, the chosen insurance company, coverage, and decision making are completed by the employer, not the employee.

2. Individual Coverage/Single-payer

Health insurance coverage can be tailored to your specific needs and preferences. With this option, you lose the discount that buying insurance as a group brings but gains the policy decision making authority, therefore, can purchase what YOU need.

3. Family Coverage

Employers or groups may offer health insurance coverage for family-like unions but can also be purchased independently, just like individual coverage. A family is a small group, so a discount may be offered when compared to each family member carrying an individual plan.

Types of Health Insurance Plans

With health insurance, two common choices are HMO and PPO.

HMO: Health Maintenance Organization

This is a type of insurance plan that can cost less but is restrictive with doctors and services you may receive. With these plans, you are required to visit physicians and service providers that are in-network. To be considered in-network, healthcare providers contract with your insurance company. This partnership may restrict options, but because services are usually pre-negotiated, the services can be less expensive for you and save you tens of thousands of dollars. If you visit providers that are considered out-of-network, and your plan would not fully cover their services but may cover a small portion.

PPO: Preferred Provider Organization

These plans are less restrictive and allow you to visit service providers outside of the network. You may still work with providers that are in-network and save money by doing so, but if you prefer to be more selective in choosing your doctors, PPO plans allow this. One popular feature of PPO plans is that a doctor referral is not needed to see a specialist. The premiums of PPO plans are usually more expensive.

Whichever type of plan you opt for, any good plan should carry these essential benefits:

• Ambulatory services (outpatient care provided without being admitted to a hospital)
• Emergency services (emergency room visits and ambulance transportation)
• Hospitalization (surgery and overnight stays, inpatient care)
• Laboratory services that include testing needed for a doctor to diagnose an injury, illness, or condition, or to monitor the effectiveness of a particular treatment

• Mental health and addiction treatment services
• Pediatric services, including oral and vision care
• Pregnancy, maternity, and newborn care
• Prescription drugs coverage
• Preventive, wellness, and chronic disease management services
• Rehabilitative (recovering skills) and habilitative (developing skills) services and devices to recover or gain mental and physical skills

Alternative Options for Coverage

Health Cost Sharing Ministries

These plans are included in this option because Christian Health Coverage programs are trending on social media. These programs function very differently from traditional HMO and PPO programs. The coverage is like an auto policy that pays on the event.   If the event costs more than the deductible the ministry pays. If the cost is catastrophic, they have a group of people who donate to pay these expenses. With this plan, you will pay for doctors’ visits for services that don’t meet the per event deductible. It’s an interesting concept and one program paid out half a BILLION dollars in 2019. To learn more visit Christian Ministries or read this article from Lauren Greutman. You can also do a search for “health cost sharing ministries” to find programs to explore.

Health Saving Accounts

(HSA) is a tax-advantaged investment savings account for individuals that have high-deductible or catastrophic-coverage health plans. The savings account may be used to pay for qualified medical expenses that are over and above the coverage limits or exclusions of your insurance policy. Contributions are limited to a maximum amount each year and made into the account by you or your employer. The contributions are invested so they grow in value and can be used to pay for qualified medical expenses, which include most medical care such as dental, vision, and over-the-counter drugs. The money you save stays in the account until you use it. Once you reach the age of 65, the money you have saved in your HSA may be withdrawn and used for any purpose. If the money is used for qualified medical expenses, it is tax-free. If, after the age of 65, the money is withdrawn used for other purposes, it is treated as taxable income. You can learn more about these savings accounts at Fool.com or Investopedia.

Final Thoughts

Carefully consider your health insurance options. You never know when a catastrophic health issue could occur and having the right policy can protect you and your family from financial disaster and ensure you get the care you need to heal.

Actual Cash Value (ACV) – The amount of money an insurer will pay in the event of a loss, replacement, or repair.

Annual Maximum  – The most money a dental plan pays for dental care under the terms of your policy within a 12-month benefit period. Any amount over the annual maximum is paid by the insured.

Beneficiary – Any person(s) receiving benefits provided by an insurance policy.

Bundling – Purchasing two or more insurance policies with the same company for a price discount.

Claim – A request for insurance company compensation as part of policy coverage for a covered loss.

Collision Coverage  – Insurance to repair or replace a vehicle damaged in a collision, regardless of who is at fault.

Comprehensive Coverage – Insurance protection for vehicle damages that occur in an event other than a collision. Including theft, natural disasters, vandalism, and most things not covered by collision coverage.

Co-payment – A fixed amount of payment made by a beneficiary (especially for health services) in addition to that made by an insurer.

Coverage – The protection against financial loss provided by an insurance contract for policy specific inclusions.

Deductible – A set amount of money required by you to pay towards care, damages, replacement, or repair costs before your insurance coverage kicks in to cover additional or remaining costs.

Dental health maintenance organization (DHMO) – A structured type of dental plan with provider approved dentists and services negotiated to offer reduced prices to the policyholder.

Dental indemnity plan – A dental insurance plan offering the policyholder a more personal selection of dentists and services, with insurance also paying more of the costs. This plan typically has the highest premiums.

Dental preferred provider organization (DPPO) – A dental insurance plan allowing policyholders to work with dentists that are in or out of the plan’s network, with out-of-network providers costing the policyholder more for services.

Depreciation – A decrease in the value of property (e.g., house, car, roof, water heater, etc.) due to wear and tear or becoming obsolete.

Elimination period – The time period between an injury and the receipt of benefit coverage or payments.

HMO: Health Maintenance Organization – Health Maintenance Organization (HMO). A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO.

In-network  – Refers to healthcare service providers whose services are contracted with your insurance company, and services are less expensive than out-of-network providers.

Insurance Rider – A rider is an insurance policy provision that adds benefits to or amends the terms of a basic insurance policy. For an additional cost, riders provide insured parties with options such as additional coverage, or they may even restrict or limit coverage. A rider is also referred to as an insurance endorsement. It can be added to policies that cover life, homes, autos, and rental units.

Lapse – The portion of uninsured time between policies caused by the termination of a policy for non-payment or other unmet contractual requirements.

Liability Coverage – A basic level of vehicle insurance where a minimum amount of coverage is required by law.  Often set by each state individually and can vary widely.

Loss – The injury or damage sustained by the insured that the insurance company agrees to cover.

Market Value – The estimation of how much your property is worth if sold today.

Negligence – A lack of reasonable care exercised by a person/party in a given situation.

No-Fault Insurance – A type of car insurance for covering the costs of medical, hospital, and funeral expenses that result from a car accident —regardless of who is at fault.  Also called Personal Injury Protection (PIP) Insurance.

Out-of-network – Refers to healthcare service providers who do not have negotiated rates with an insurance company, with services often costing more than in-network providers.

Personal Injury Protection (PIP) Insurance – See No-Fault Insurance.

Policy – A formal contract of insurance consisting of terms, conditions, and coverage specifics.

Policy Length – Or policy duration is the length of time during which an insurance policy remains valid—ranging from months to years depending on insurance type.

Policy Owner – Person or party named in the policy, having the authority to make policy changes.

PPO: Preferred Provider Organization – A healthcare provider who has a contract with your insurance company to provide services to you at a discount.

Premium – The amount of money an insurance company charges for providing coverage.

Reinstatement – The reactivation of a policy after a lapse in coverage.

Replacement Cost Value (RCV) – Coverage paying for the replacement or repair costs to restore damaged property to pre-damaged condition.

Term – The length of time for policy coverage. Also, see policy length.

Total Loss/Totaled – Property damage determined by the insurance provider to be destroyed or exceeds the cost of repair.

Underinsured Motorist Coverage – Coverage for bodily injury or property losses caused by a motorist with coverage insufficient in covering the full amount of damage costs.

Uninsured Motorist Coverage – Similar to underinsured coverage, uninsured coverage can help pay for damages when an at-fault driver uninsured, so instead of their policy covering the costs, your policy would.

Waiting Period – A period of time an insured must wait before some or all of coverage is available. The insured may not receive benefits for claims filed during the waiting period.