Once upon a time nearly everyone received health care coverage through employer group health plans, but these days many are turning to individual medical coverage to ensure they have access to the medical services they need. Issues such as unemployment, self-employment and companies cutting-out group health benefits are requiring people to brush up on their insurance knowledge so they can make the best decisions for themselves and their dependents.
With medical costs increasing, it is more important than ever to have the right coverage to meet medical needs. When you are in charge of selecting your individual medical coverage, how can you know if the plan is right for you? And is it even possible to find affordable health coverage outside of an employer group health plan?
It is worth your time to wade through the information to determine what individual medical coverage is best for you and your budget. To make it easier for you, below is a compilation of the information you need to make solid decisions about your coverage choice.
Breaking down the insurance lingo
While some of the insurance terms may be familiar to you, others may seem like part of a foreign language. Here are some terms you will likely need to know:
· Premiums—this is the money you pay to receive individual medical coverage. You may pay it monthly or yearly. Insurance companies base the amount of your premium on factors including age, level of health, medical history, lifestyle and occupation.
· Deductible—this is the money you will have to pay out of your own pocket prior to your medical coverage kicking in. Typically, you can select your deductible to fit your medical and financial situation. For example, a lower deductible requires a higher premium, while a higher deductible will allow you to keep your premiums low. Still, a high deductible isn’t always best if you know you will be using medical services often.
· Coinsurance—this is a percentage of the medical bill that you will pay. For example, some medical plans will offer a coinsurance rate of 75/25, which means you will pay 25% of the medical costs while the insurance will pick up the other 75%.
Understanding the types of individual medical coverage plans
Once you are more familiar with the language of health insurance, you will want to familiarize yourself with the different individual medical plans offered. These are the most common:
· HMO—Standing for Health Maintenance Organizations, HMOs are designed to be a more affordable health insurance coverage. They provide comprehensive medical coverage through a network of hospitals, doctors, clinics and health care professionals. If you have a particular doctor or hospital you prefer, it is important to make sure they are included in the HMO network, as these types of individual plans are quite costly if you go outside of the network for care.
· PPO—Standing for Preferred Provider Organizations, PPOs are different from HMOs in that you can have coverage from a variety of different doctors and specialists without referrals. Still, there is typically a PPO network of doctors and hospitals that offer you more coverage, but you have the freedom to choose outside of the network and receive partial coverage.
· FFS—Standing for Fee for Service, the FFS plan, also known as indemnity insurance, is a very simple, straight forward individual medical coverage through which you obtain the medical care you need from any doctor, hospital or health care professional, pay for the fees yourself, and then receive a reimbursement for a specific percentage of what you paid. This is not a comprehensive plan and it does not cover preventative care, but is one option for an individual who does not plan to receive a lot of medical care and cannot afford higher premiums.
· HSA—Standing for Health Savings Account, the HSA account offers coverage that works as a catastrophic medical plan with a high-deductible and lower premiums. The account also includes a savings account that is tax-free and allows you to save money to pay for the more routine medical care yourself.
Conducting a thorough health insurance plans comparison is a wise way to choose the best plan to meet your needs. It makes good sense to research the plans, so you are fully aware of the cost and coverage and know what to expect.