Group Health Insurance
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06-21-2009by Colleen King
Here is another term in Health Insurance, both Group Health Insurance and Individual Health Insurance that people don’t always understand. I would have posted this sooner, but it’s been a busy month!
(“Help, I don’t understand!”)
Coinsurance might be easier read with a hyphen; co-insurance. This is one of the three main questions people should ask (in my opinion) in looking at a health insurance plan. You have the deductible, the out of pocket maximum and then that step in the middle, co-insurance. ‘What’s my co-pay’ is a good one too, but not as important as the ‘big figure’ numbers.
Generally the deductible is what you pay before the coverage kicks in. If you have something big hit, the out of pocket maximum, or co-insurance maximum is the part that keeps you from going broke. Once you hit your out of pocket maximum, that is generally all you pay on eligible health care expenses for the remainder of the calendar except for office visit co-pays and prescription drug co-pays, depending on your plan. The key word here being, eligible.
How do you reach your out of pocket maximum? That’s where co-insurance comes in. Once you hit your deductible, then the carrier starts to pay. Co-insurance is what percentage of eligible charges they pay and what percentage you pay. 80/20 used to be pretty common, with the carrier paying the 80% part. Now we are seeing all kinds of splits. There are a few (very few) 90/10 plans, but they are really expensive. In the individual market we mainly have 70/30 plans in California, but now there are 60/40 and even 50/50 plans.
Some people balk at a 60/40 or 50/50 plan–what’s the point in having insurance, they ask. That brings me back to the out of pocket maximum. You may be paying 30, 40 or 50% of the bill, but once you hit the out of pocket maximum the carrier pretty much comes into play at 100%. It’s a matter of how soon do you want the carrier to come into play.
All plans are not created equal. The more you want from a plan, the more it will cost. If you want more coverage sooner, it will cost you more. In reality, you’ll either pay in advance (premium) or you’ll pay at the time you need help (medical bills). So if you can handle more of the expense of health care, buy a plan with a lower premium, especially if you’re basically healthy. There’s no rebate for low utilization if you have a ‘healthy’ year as opposed to a ‘sick’ year.
Be well!...read more
06-04-2009by Colleen King
It’s getting to be that time of year when the four years of college (or five, or six) is about to wind up. At last. That tuition bill is going to be gone and the kid(s) will be out of the house. Then it occurs to mom and dad (not usually to the new grad) that their young adult can’t stay on their insurance policy any longer.
Carriers allow full time college students to stay on their parents’ coverage until age 23, 24, or even 25. As the hassle with pre-existing conditions continues to increase, some carriers are talking about increasing the age a kid can stay on their parents’ policy, even if they aren’t in college. But we aren’t quite there yet.
This little detail can easily escape everyone since finals and planning for graduation are a lot more interesting. I had this situation come up last year with a family, and there are a couple ways to do it. It was a Friday, college graduation was Saturday, the new grad was turning 24 on Sunday so as of Sunday, she was going to be uninsured and Mom was panicking.
We could have done a regular policy, but since that usually takes 2-4 weeks, the young woman wouldn’t have been covered. Instead, we elected to do a short term health plan. These will vary from state to state, so what I’m relating here pertains specifically to California. These plans I refer to as ‘accident and illness’ policies. They don’t cover anything routine, they don’t cover pre-existing conditions or maternity, but if you get sick or have an injury you have coverage. And, because it doesn’t cover anything pre-existing the underwriting, or review of the application, is much quicker. We can usually get a response in a couple of days.
So the short term health plan was how we handled it. These can be kept on a month to month basis, up to a maximum of 6 months, and if you’ve not had any claims, you can renew it for up to another six months. These plans are also really useful in situations where you get a new job, you don’t have benefits for the first 90 days of employment and you don’t want to pay the exorbitant cost of COBRA. I’ve used these many times and while they aren’t ideal due to the fact that they are short term, they sure can be a great stop gap. And the carrier I use most, if you go to an emergency room for an injury, the deductible is waived. I wish all policies would do that!
So congratulations, and good luck to the class of 2009!
05-10-2009by Colleen King
A couple of months ago I did an article on COBRA coverage: how it works, and why you should or shouldn’t take it.
Now that there’s a subsidy of 65% for people involuntarily terminated after September 1, 2008, the picture changes somewhat. Depending on how much the 35% you have to pay is, that 65% can be pretty tough to turn down. But I still have a couple of caveats for you.
This only lasts 9 months. With any luck, during that time you will have another job, with benefits, and you don’t have to think about this any further. Normally when someone is offered COBRA I suggest they look at an individual plan if they are potentially insurable because anyone can have something develop or happen to them that could render them uninsurable.
I still think you have to give that serious consideration but I know that subsidy is REALLY tempting. Here is what I think you should consider. If buying the coverage is on your own is less than the 35% you’d need to pay, then look at individual plans. Whenever someone elects to take COBRA for a family, but not everyone needs to be on COBRA, meaning they are insurable, look at individual plans. Especially if you don’t qualify for the subsidy. You need to look at all options for your situation, which is why an independent agent in addition to your HR person at work is important.
If the cost issue with the subsidy is close, maybe the plan on your own is slightly more than your COBRA cost, consider getting your own coverage, again, just in case. It’s all a matter of what’s going to make things easiest for you to handle.
Be well!...read more
04-28-2009by Colleen King
It’s so nice to have people that keep you on your toes. Health Insurance questions abound when you ask for topics for this blog. Thanks to Lisa Nicole Bell again, www.adivinebook.com for this one.
The plus for you, the consumer, whether it’s for individual health insurance of group health insurance is that the rates are the rates. No one has special ‘deals’ to get you something better, it’s a matter of service. When you go directly to an insurance company, a carrier, they can only give you information on what they offer. And that’s fine, but if you want information on multiple carriers, you have to call each one. That also means you have multiple people following up with you trying to gain your business. If you have the time to do that, great. Some people would rather do it that way, so there’s no right or wrong.
But by going to an independent agent, which is what I am, you can talk to one person, for FREE, and get all the information on several carriers from an unbiased source, theoretically. Some agents are more partial to certain carriers, so you may even want to talk to a couple different agents to see who you are most comfortable with. But basically you can have one contact for multiple companies.
Agents are paid on a commission basis by the insurance carrier they place the business with. You can talk to one of us for hours, never do anything, and there is no charge to you. One of my group cases, I spoke with the contact for 2 1/2 years before they did anything. The situation was such that they didn’t need to start a group plan right away. But when they finally did, it absolutely was worth the wait. One of the two partners in this group has referred 3 family members to me because she liked working with me.
An even more important reason to have an independent agent is if there is an issue after the sale. Agents working for a carrier will certainly do all they can to help you if there’s an issue, usually. But, if an outside agent is pressing an issue, carrier reps (the people inside the company that an independent agent can call for problems) know you can move that business by next month if the client is really unhappy.
So again, there’s no exact answer because everyone will have different opinions. But if you have a good independent agent, you may end up doing less of the leg work yourself which many people prefer in this busy day and age.
Be Well!...read more
04-13-2009by Colleen King
Once of the best things about getting my insurance license was learning the difference between the two basic types of insurance, which had eluded me for years. Basically there are two types of life insurance and they break down to temporary and permanent.
Love this, this should be our ‘real’ security
An easy way to remember the difference, is ‘term is temporary’—Term life insurance is something you buy for a specific period of time, 10, 20, 30 years for example, and for a specific amount. At the end of that time period, if you are still around, that’s it; it’s gone. One ‘add on’ option is to buy what’s called a return of premium rider, so that and the end of the term, if you are still alive, all the premium you have paid is returned. Term is generally what you buy when you are younger, because financial demands are greater when raising your family, and term life insurance is more affordable.
“Permanent” types of life insurance basically are whole or universal life. Once you buy these policies, they are in force until you pass away or cancel them. People tend these days to lean more toward universal life versus whole life because the premiums are flexible; you aren’t always locked into a specific amount per month. The downside with permanent types of insurance is that these policies are more expensive, because they have to be in place for an unknown length of time. These policies also build a ‘cash value’ which can be used in a number of ways, including supplementing retirement income.
Most term policies are able to be converted to a permanent policy without proof of insurability, which helps out later in life. You can make it for a lower face value, so you can still take care of your loved ones needs without having to qualify for on a health basis. The main reason to have life insurance is to buy your surviving spouse time to grieve and deal with life without facing losing the home. It gives them time to figure out what they are going to do, and not having to make huge financial decisions at a time when they can’t think straight. And that’s what matters.
Be well!...read more