Learn: Medical Insurance

What is the purpose of medical insurance?

To use a machine analogy, health insurance is designed to cover repairs, maintenance, and any lost income while you’re “in the shop.” What are the major types of individual medical insurance policies?

There are many variations on affordable health insurance policies. The two most common are major medical and disability, but we also offer Dental and Vision plans.

Do I need an individual policy if I have group insurance at work?

Maybe. Many factors must be considered, such as: Do I plan to remain at my current job? Do I feel secure in my current job? What current benefits does my employer provide, and do I feel they are sufficient?  

There may be certain benefits that are not provided such as Dental, Vision, etc, or limited with high deductibles, and co-payments?    Also - Are there members of my family who are not adequately covered, or are ineligible, for my group benefits?

With Healthcare reform you are required to purchase a policy for each member of your household or face a fine.    We have access to all major plans including the new Covered California marketplace when available October 1st.   We can help guide you through the process, determine eligibility for any subsidy’s,  discuss your options, provider networks, and more. 

What is a major medical insurance policy?

This is the most common form of individual or group health insurance. It provides benefits for sickness or injury, regardless of whether the care is provided at a doctor’s office, clinic, or hospital. T he types of sickness and injury covered are typically broad, although there are always limitations that should be discussed with your medical insurance agent prior to purchasing the coverage. Major medical policies normally have an annual deductible and a lifetime maximum amount of benefits that will be paid.

With Healthcare reform even "major medical" plans (also now known as "Bronze tier plans") now include "essential benefits" as described below.

Essential Benefits

With Healthcare reform all new plans including "major medical" plans now include the following "essential benefits"

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance abuse disorder services (including behavioral health treatment)
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care
Note:  Some "grandfathered" plans are not subject to this rule, and therefore may be less expensive.
 

What does coinsurance mean in a medical insurance policy?

In a health policy, coinsurance represents the percentage of the medical bills the insured will be responsible to pay after the deductible is met. For example, if your policy is 80% coinsurance, then once the deductible is met, the insurance will pay 80% of covered medical bills and you pay 20%.

Typically there will also be a provision called a stop-loss, which is basically a maximum amount you will ever have to pay out of your own pocket for covered medical bills. For example, let’s say your policy states it is 80% coinsurance, with a $1,000 stop-loss. Once you’ve paid your deductible, your covered medical bills are $7,000. Here’s how that would work: First, the coinsurance provides the carrier will pay 80% of the $7,000 ($5,600) and you will pay 20% ($1,400). But, your stop-loss says your maximum payable for this claim is $1,000! So you only pay the $1,000, and the additional $400 comes from your insurance company. Notice this provision gets more valuable as the claim gets larger. No matter how large the final claim, or what percentage of coinsurance you’ve purchased, your stop-loss says your share of the covered expenses will never exceed $1,000.

Please note some polices refer to stop-loss as maximum out-of-pocket. And many polices include the amount of the deductible in determining when you hit your maximum, also a helpful provision.

What does disability mean?

In its simplest sense, it means you are unable to work. But it’s important you realize the definition of the term under a given disability income policy will be specified by that policy. The broader the definition of disability, the higher the cost and increased limits to the underwriting restrictions. For example, some policies will define disability to mean the inability to reasonably perform the duties of your occupation,while another will define it as the inability to reasonably perform the duties of any occupation.

How significant is this difference of a single word? To use an extreme example, if you were a highly trained surgeon, the first policy would pay you if you were sufficiently injured that you couldn’t perform surgery. The second would refuse to pay if you could perform any job even sweeping floors or answering phones. Despite the obvious loss of income when going from surgeon to receptionist, the policy definition of disability will determine whether you will receive benefits for specific policy. As you might guess, the second policy is likely to be great deal less expensive. Also, you can see your current occupation is the single most important factor in determining what type of disability policy and coverage options you will be eligible for.

What is a PPO?

This stands for Preferred Provider Organization. Basically, this is a network of health care providers who have agreed to provide certain services at agreed-upon costs for individuals whose coverage is a part of the network. (Some suggest it is best described as a discount-buying club for medical care.) You are free to use any medical provider within the network, and all will honor the agreed services and fees. If you choose to use a provider who is not an approved member of the network, your coverage may be diminished, your personal cost higher, or, in some cases, benefits for non-emergency services may be totally denied.

What is a HMO?

This stands for Health Maintenance Organization. Unlike a PPO network of independent care providers, HMOs are typically fixed facilities, and benefits are designed to cover services obtained at the HMOs facilities and supplied by HMO personnel. HMO coverage plans must specify how and under what circumstances services may be obtained from non-HMO providers, and this information is crucial to determining the value of the HMO under your particular circumstances.

What is an EPO?

This stands for Exclusive or Enhanced Provider Organization.   In simple terms, they are a hybrid PPO & HMO.   Like a PPO you have a list of participating doctors and hospitals.  However the # of Doctors,  Hospitals, and Pharmacies are much more limited.    The idea here is you can self refer, like a PPO, but these doctors are highly networked and managed, and require a lot of pre-authorizations (similar to HMO's) to reduce costs, with savings passed onto the consumer.    That savings does come at a cost of choice and time.

What is the purpose of PPOs and HMOs?

By assembling a network of providers who agree to provide services at a discount (PPO) or by requiring you get all of your services from a specific provider, with an emphasis on preventative care (HMO), the hope is to provide you the best possible care at the lowest possible costs. A downside is such benefits and discounts require a great deal of control over your health care options by the PPO or HMO, and not all the limitations are popular or convenient. And whether these approaches are always successful is subject to ongoing debate, and results can vary greatly by where you live.

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