Group Health Insurance
Health care reform
Health Savings Accounts (HSAs)
Individual Health Insurance
Long Term Care Insurance
Medicare related coverage
03-31-2009 by Colleen King
A few weeks ago a delightful young woman asked me about health insurance, and what was good for a young professional or new grad, or people in general under 35. This answer is for you, Lisa Nicole Bell (http://wwwadivinebook.com). You really need to check her site out, she has a lot to offer in these crazy times.
Anyway, The answer to Lisa’s question could take a lot of space, but here goes. If you’re lucky enough to land a job out of school, or a job anytime that offers health insurance, you absolutely should sign up for them. Many times you only have one plan to choose from so that makes it easy. Other times you may have a choice between an HMO plan and a PPO plan. HMOs are good because even though they generally have smaller doctor networks, your financial outlay if you need care tends to be a lot less. AND, in group plans the HMOs usually cost less than PPOs so your contribution to the premium might be lower . With PPOs though, you have more doctors to chose from.
If you have to fend for yourself and get an individual health plan, which happens more and more these days, things change somewhat. In the last couple of years there have been a lot of individual plans that are really cost effective, but the reason they are is that they don’t cover maternity. This concerns me because even when young women aren’t planning on a baby anytime soon, things happen. Then, you can’t change plans to get maternity coverage because if you are pregnant, it’s an automatic decline when you apply. So I urge women in their 20s and 30s to have something with maternity just in case. But ultimately it’s their decision. There is one insurance carrier in California that will allow you to switch to their $5000 deductible plan that covers maternity, but wow.
I suggest when you are looking for an insurance plan that doesn’t cost a fortune that you consider one that does one or more of the following:
Offers a limited number of office visits per year for a fixed co-pay. You can still see a doctor, but the deductible then comes in to play. Since most younger people don’t see a doctor more than 1-2 times a year, this usually works.
Consider a plan that offers only generic prescription drug coverage. My preference is for everyone to have full coverage, just because I’m cautious, but many times you would be fine with just generic.
Consider a qualified high deductible health plan that you can use with a health savings account (HSA). These are definitely less expensive, and some offer maternity coverage. The thing you have to understand about these types of plans is that the only benefits you have prior to meeting the deductible are preventive. You pay for everything until you meet the deductible. BUT, when you have an eligible plan you can open an HSA, put money into that to save for future health care costs and the money deposited in the account is deductible on your federal tax return. And in some states too.
People often ask about ‘catastrophic’ plans. There isn’t really a clear definition on that, but these are generally considered to be the PPO plans with $5000 deductible or higher, maybe they have office visit coverage, maybe they have prescription drug coverage. There is also a set of plans that are hospitalization only, and those really scare me because that’s exactly what they are–hospitalization ONLY. No prescriptions, no office visits and usually no coverage for outpatient care which can be costly.
So to answer the question, what kind of coverage should people in their 20s and 30s get? Call an independent agent and discuss your situation. It’s a matter of what will fit in your budget, how extensive you want the coverage to be and your overall health situation. Calling an independent agent is really helpful because they can help you compare companies instead of you calling all of them. AND, their services are free to you. You will get the same rates whether you go to an outside agent or directly to the carrier. Just do something; medical costs aren’t dropping any time soon!