Health Insurance Articles

If all of a sudden you were an accident, would you be able to cover your lost income as well as all the co-pays and deductibles without straining your finances?  There’s a good chance that even if your health insurance provides excellent coverage that an unforeseen medical emergency or stay in the hospital would hit your pocketbook hard.  Supplemental health insurance is intended to help bridge the gaps that regular health insurance policies don’t cover.  In addition, it can provide much needed cash to help replace any lost wages and pay for living expenses.

Supplemental health insurance works differently from standard health insurance.  With standard health insurance, your policy pays your health provider or doctor for their services that they provide to you.  You may have to pay a co-pay or deductible, and usually your health care provider takes care of the insurance paperwork.  The benefits from your health insurance are paid directly to your doctor or other health care provider.

With supplemental health insurance, you are usually paid a fixed amount when you utilize health care services on a specific incident.  As an example, if you were to fall and sprain your ankle your regular health insurance would pay the doctor bill, but you would need to pay your deductible or co-pay.  The doctor’s office would bill your insurance company and bill you if there was an excess.  If you had supplemental health insurance that pays $50 for a visit to the doctor, you would be able to file a claim and your supplemental insurance company would pay you $50.  You could then use the $50 to pay towards your co-pay or deductible and any other expenses.

The benefits on a supplemental health insurance policy vary from policy to policy, with the differences usually having to do with the specific purpose of the policy.  AFLAC, for example, is designed to help policy holders cover medical expenses that most health insurance policies do not cover by paying them in cash for doctor visits, hospital costs, or for being out of work due to an injury or illness.  Other types of supplemental policies are intended to help pay for prescription costs or for paying out benefits for disabling accidents or catastrophic illnesses.  Some policies are for hospitalization only and some for long-term care.  There are quite a few supplemental policies designed for the purpose of paying for costs that are not covered by Medicare health insurance.

Not everyone needs supplemental health insurance.  However it is a form of financial protection that can come in handy if you do not have savings or sufficient means to cover any unexpected medical costs that could crop up.  Supplemental health insurance should be considered if you have small children, are self-employed, are on Medicare, or if you do not have the financial means that it would take to be able to handle large medical expenses or be away from work because of injury or illness.

The best policy for supplemental health insurance will depend on the individual and his or her circumstances and specific needs.  For young families, as an example, supplemental insurance policies that pay for wellness care are very helpful.  Hospital indemnity policies that pay cash benefits for parents who are unable to work due to illness or for being hospitalized would also benefit young families.  For older adults, a long-term care or supplemental policy that pays a lump sum benefit for catastrophic illnesses could be very useful.  A prescription benefit plan could help both families and older adults to help meet medical expenses that regular health insurance and Medicare don’t cover.

Health Savings Accounts (has), which are also called Medical Savings Accounts, can be a great way to save on medical and health insurance costs.  An HSA offers a solution that can help you control the high price of health insurance.  You do this by paying less for your medical insurance and saving some of your own money to go towards paying for medical expenses.  It works together with a medical insurance policy with a high deductible and helps you to save money on your health care expenses in several different ways.

A Health Savings Account is a savings account that is tax-sheltered.  It is intended to help with the high cost of health insurance premiums.  The HSA was established with the passage of the Medicare Prescription Drug, Improvement and Modernization Act of 2003.  It was intended to improve upon the Medical Savings Account (MSA).  The HSA is like an IRA for medical costs and has similar regulations and rules.

One common way to save on health insurance premium costs is to choose a higher deductible.  An HSA works hand in hand with high deductible insurance plans to help you save money on medical expenses.  To do this you can enroll in a health insurance plan with a high deductible.  This can be done with either an employer or individual insurance plan.  Next you open an HSA, with its advantages and restrictions that are similar to an IRA.   You can contribute to your HSA each year up to a maximum amount.  Deposits made into your HSA are not subject to tax when you make the contribution and can be used for medical expenses at any time tax-free.  You can use funds from your HSA to pay for insurance policy deductibles as well as for medical expenses not covered such as vision, dental and alternative medical procedures by your health insurance plan.

You will save money with your HSA in two ways.  The first way you will save, is that you will pay a lot less for health insurance.  This is because you will be paying from your savings.  When you choose a high deductible, your insurance premium is less expensive.  You will also save money because the money you contribute to your HSA is all tax deductible.

If you medical costs in a year are more than your deductible, your health insurance policy pays your medical expenses just like any other insurance policy would.  It works the same as any other health insurance policy.  It’s just that your deductible is higher, but you are paying for it with tax-deductible money.

The money that is in your HSA belongs to you.  If you end up not needing it for medical expenses in a particular year, the amount remains in your account and either earns interest or can also be invested at your direction.  You will still be eligible to make the maximum contribution in the following year and the extra amount in your account does not change your deductible in any way.  You are not made to pay more medical costs before your health insurance coverage begins.

Any money that you don’t use for medical expenses stays in your account and earns interest that is tax-free.  The only time you will be required to pay taxes on the money in your HSA is if you end up withdrawing it and not using the money to pay for medical expenses.

Most adult Americans receive health insurance from their employers or spouse’s employer.  However, according to a survey done by the United Health Foundation in 2006, nearly 16% of Americans do not have health insurance.  Approximately 60% of Americans have health insurance through their employers and 27% have Medicaid.  Most of the remaining have some form of individual health insurance.

Many who are not insured are forced to go without health insurance because of a pre-existing medical condition.  They are considered to be too high of a risk by insurance companies to be eligible for health insurance.  Individuals that have pre-existing medical problems usually find it very difficult to obtain health insurance if they are not able to rely on some sort of employer-based health care plan.  They usually have very few option for obtaining health insurance, even at high costs.

For what are sometimes called the uninsurable, their only option may be to obtain insurance through a high risk pool that is state-run.  These plans are designed to provide health insurance to individuals who are not able to get health insurance because of a pre-existing medical condition.  34 states currently operate a high risk pool.

The way these work is a state-run high risk pool creates a pool of individuals who are unable to get individual health insurance.  All the members of the group are able to obtain health insurance through the state-sponsored program, although it is at higher rates than it would be for individuals without pre-existing medical conditions.

Usually members of high risk pools can select between PPO, HMO and FFS plans.  Each type of plan offers different degrees of flexibility in terms of how individuals are able to manage their health care.

However, there are disadvantages to these types of health insurance plans.  They are expensive.  Members that belong to high risk pools may have to pay as much as twice what someone who qualifies for a regular individual insurance plan would.

Many high risk pools also have an exclusion period for pre-existing conditions of six to twelve months.  This means you must wait for that period of time before you are eligible to make a claim for medical costs.  However, the high risk pool may be the only alternative for some individuals or face not having any health insurance at all.  Since the costs of not having any insurance can still be much higher than having expensive premiums, this still is an attractive option for some individuals.

In order to qualify for health insurance through a high risk pool, you will need to be a state resident and must also meet one of these conditions:

> Proof that at least one insurer has rejected you for health insurance
> Proof that your current insurance premium is higher than what could be offered by the state’s high risk pool
> Proof that your health insurance has a rider attached or is rated

Some states also have reciprocity agreements that make you eligible to apply when you were previously enrolled in another state’s high risk pool if you meet residency requirements.

Individuals who are excluded from the state high risk pools include individuals on or eligible for Medicaid or Medicare, as well as individuals who have exceeded their maximum benefits on their plan.  Some states also have their enrollments capped and will only accept a specific number of individuals.