Understanding Individual Health Insurance

You don't have to be in a group to have a plan

Health Insurance Basics

The majority of today's health insurance plans included two major features:

Deductible- The amount that the insured must pay before insurance benefits begin
Coinsurance- Once the deductible has been met the insurance company will pay a percentage of the medical costs, until an out-of-pocket maximum has been reached, after that the insurance company will pay 100% of the cost up to a lifetime maximum

Both the deductible and out-of-pocket max are annually renewed.

For example if you had a $1,000 deductible and 80% coinsurance with an out-of-pocket maximum of $3,000 the benefit breakdown for a $250,000 dollar claim would be:

	You Pay	Insurance Pays
1st $1,000	$1,000	$0
$1,000 - $11,000	$2,000	$8,000
$11,000 - $250,000	$0	$239,000

Additional Provisions

Many health insurance polices have several provisions regarding common health issues that are covered under a copayment system. These provisions provide benefits without having to pay (and do not count towards) the deductible and coinsurance. Instead the insured pays a set amount for services and the insurance company pays the difference. Copayments, especially for prescription drugs, often have multiple tiers of cost based on the type of drug purchased.

Copayments can take the form of a percentage of the total cost or a set dollar amount for the service provided. Types of provisions include:

Doctor Visits
Preventative Care
Chiropractic Care
Emergency Room Visits
Urgent Care Visits
Prescriptions

Maternity benefits can be added to many individual policies for an additional cost and have stipulations and limited benefits unique to each health insurance carrier or policy. Complications to pregnancy are often covered under the policy at no additional cost.

Mental health coverage, and Drug and Alcohol addiction treatment, including prescriptions, often have limited or no coverage depending on the specific policy

Other Considerations

In/Out of Network - When insurance carriers negotiate rates with health care providers they are considered “In Network.” Depending on the specific policy services provided “Out of Network” may be covered, but typically the insured must pay a higher deductible, coinsurance, and out-of-pocket maximum for the privilege. Garvey & Associates only offers insurance plans from carriers with excellent nationwide network coverage

Pre-existing Conditions - Policies do not cover preexisting conditions for a period of time. The exclusion period and definition of a preexisting conditions can vary by policy

Plan Types - So far we have described a preferred provider organization (PPO) insurance plan. Depending on your situation you may also want to consider a High deductible Qualified Plan (HDQP). HDQP plans are characterized by a high deductible that applies to every type of service provided but then pay 100% of the cost thereafter. HDQP plans are designed to encourage health care cost control by exposing the actual cost of services provided, which are often hidden from consumers that are in a copayment based plan. HDQP's have an added benefit of being able to be combined with a Health Spending Account (HSA) that has a Tax benefit that is often referred to as the “Triple Dip”:

Contributions to the account are made with Pre-Tax dollars
The interest in the account is gained tax free
Distributions from the account on qualified purchases are made tax free

Other Types of Health Insurance

Individuals in-between jobs or not yet covered under the group plan at a new employer may qualify for temporary insurance.