Health Insurance

 

What is Health Insurance?
A health insurance plan will pay for expenses related to medical services.  Because these services are typically very expensive, health insurance is essential to protect your financial security.  While we all wish for good health, we never know what medical issues we may have in the future. Having health insurance will help alleviate the financial burden medical expenses can cause. 

What kinds of health insurance are there?

There are many kinds of health insurance.   The health insurance coverage you need to avoid a tax penalty under the Affordable Care Act (a.k.a. Obamacare) is one that satisfies the Minimum Essential Benefits. 

         PPO (Preferred Provider Organization) - Having a PPO plan is the most popular health insurance option.  You can go to any doctor "In Network" and you do not need a referral to see a specialist.  If you have services "Out of Network" you will pay a separate "Out of Network" deductible, co-payments, and coinsurance amounts, plus you could be charged for balanced billing.  Because these out of network charges could cost you thousands of dollars, it's important to stay "In Network."  When comparing plans, always check the network and your doctor. Networks are always changing, and your doctor may drop out at any time.  It's important to be aware that networks are getting smaller and smaller, and out of network charges are unlimited, so it's more important than ever to pick the right plan.

        HMO (Health Maintenance Organization)  - Having an HMO is in many ways an affordable option, however it has some restrictions.  You must assign a designated Primary Care Physician.  This physician will manage your medical needs.  If you need a specialist, your Primary Care Physician provide you with a Referral.  All services must be handled by "In Network" providers.  Out of Network charges are NOT covered.

        Short Term Health Insurance - Having a short term plan is intended to be in force for a short period of time.  If for example, you're waiting to be covered under a group plan, or you missed open enrollment, you can purchase a short term policy to cover you during this period of time.  This kind of policy will not cover pre-existing conditions (even if you are unaware of the condition), nor will it meet the Minimum Essential Benefits needed to avoid a tax penalty. 

        Accident Insurance  - Accident Insurance helps you handle the medical and out-of-pocket costs that add up after an accidental injury. This includes emergency treatment, hospital stays and medical exams, and other expenses you may face, such as transportation and lodging needs.  There are limits of coverage in this policy and not meet the Minimum Essential Benefits needed to avoid a tax penalty.

        Dental Insurance - Dental insurance works in much the same way that medical insurance works. The plan may provide benefits for regular checkups, cleanings, x-rays, and certain services required to promote general dental health. Some plans will provide broader coverage such as oral surgery, crowns, or orthodontia.  Many plans use  PPO networks so be sure your dentist is "In Network" to get the most benefits out of your plan. 

       Vision Insurance - Vision insurance will help offset the costs of routine eye exams as well as help pay for  prescription glasses or contact lenses.

What are the Metallic Health Insurance Plans?

The Affordable Care Act plans are broken down into 5 Metallic plans, Catastrophic, Bronze, Silver, Gold, and Platinum.  The actuarial levels of coverage are as follows:

        Catastrophic - plan pays less than 60% on average, you pay more than 40%. 
                  (Catastrophic plans are available only to people under age 30, or have a hardship exemption.)
        Bronze - plan pays approximately 60% on average, you pay 40%
        Silver - plan pays approximately 70% on average, you pay 30%
        Gold - plan pays approximately 80% on average, you pay 20%
        Platinum - plan pays approximately 90% average, you pay 10%

What's the difference between a Deductible, Co-Payment, Coinsurance, and Maximum Out of Pocket Limit, and how do they work?

Depending on your plan, there are some services subject to a small co-payment.  You don't have to meet the deductible to receive these benefits.  Examples include office visits and prescription drugs.  

With some services, you have to pay the annual individual deductible first before the plan pays.  Examples include lab work (not related to preventive services), x-rays, an outpatient procedure, or a hospital stay.

After your deductible has been met, you start paying the coinsurance percentage (usually 20% or 30%) for your services until you have reached your maximum out of pocket limit (including the deductible and any co-payments you've already paid).  After your maximum has been met, the plan starts paying 100%.

Here's an example:
Silver plan with a $3,000 Deductible/$30 Office Visit Co-Payment/80% Coinsurance/$6,350 Maximum Out of Pocket Limit
    
1) John goes to the doctor complaining of knee pain. The office visit costs $150 - John pays a $30 co-payment.
2) The doctor orders an MRI.  The MRI costs $5,000 - John pays his $3,000 deductible plus his 20% coinsurance on the $2,000 balance, or $3,400.
3) The MRI shows serious joint problems so the doctor recommends surgery. The surgery costs $20,000.  John's 20% coinsurance would be $4,000.  However, since John has already paid $3,430 towards his maximum out of pocket limit, he only has to pay $2,920.
4) After surgery, John has to have physical therapy.  Since he has reached is maximum out of pocket, the plan is paying 100% of the charges for the rest of the year.

What's an HSA  plan?

An HSA plan works with a Health Savings Account. Many Bronze level plans are HSA plans.  It has a high deductible and does not cover regular office visits, prescription drugs, and other services until after the deductible has been met.  However, keep in mind, if it's an Affordable Care Act plan, it pays 100% of Preventive services. 

After the deductible has been met, the plan starts paying 80% or 100% depending on your plan.  To help pay for medical expenses before the plan starts paying, you can set up a Health Savings Account at a local bank, and contribute yearly to this account.  Because your contributions are tax deductible (subject to IRS rules) and the premiums are much lower than the high level plans, these plans can be very attractive for some individuals. 

For 2015, the contribution limit for an individual is $3,350 and for a family is $6,650.  If you are 55 or older, you can contribute an extra $1,000.

Who can help me apply for my premium tax credit and help me pick a plan?
Applying for your premium tax credit and health plan can be daunting.  Our agents are certified to operate in healthcare.gov can help you apply for your subsidy and pick a plan.  Insurance agents are paid commission by the insurance company.  

Do I have to get my health insurance through healthcare.gov?
No. You should apply through healthcare.gov only if you qualify for a premium tax credit.  If you don't qualify for a credit, you can apply through normal channels, such as an independent agency like Faller Insurance Agency.

How do I know if I qualify for a premium tax credit?
You can see if you may qualify by visiting this website:
http://kff.org/interactive/subsidy-calculator/
 
What income is used to determine a tax credit?
The income used under the Affordable Care Act is the Modified Adjusted Gross Income.  In general, it's your Adjusted Gross Income (line 37 on your 1040) plus any tax-exempt Social Security, interest, or foreign income you have.


Faller Insurance Agency has expert agents who are certified to operate on and off the healthcare.gov exchange.  Or you can click here to get a quote.