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Health Insurance

Updated: December 9, 2022

Like other insurance, you pay for health insurance to protect yourself financially if there is a major event such as a serious accident or terminal illness. Health insurance is needed so you can get the healthcare you need, to provide preventive care to keep you healthy, and manage disease to improve or restore your health. Health insurance is also important when you have a terminal illness and improving or restoring your health is no longer possible.

All Americans are entitled access to health insurance under the Affordable Care Act (ACA). If you have a terminal illness and/or low income, the only thing that may be keeping you from financial ruin is adequate health insurance. As deductibles, copays, and out of network expenses increase, even health insurance may not be enough.

The healthcare marketplace established by the ACA is a public exchange where individuals can shop for private healthcare insurance at competitive prices. It has an open enrollment period from November 1, 2022 through January 15, 2023. You must enroll by December 15, 2022 if you want coverage that starts January 1, 2023, otherwise you can only enroll under specific circumstances.

Health insurance is a complex topic that involves many concepts and a wide range of options that need to be taken into consideration when choosing the appropriate coverage for your situation, but there are some things that are common to all of them. They all contain Uniform Policy Provisions that are a set of clauses that outline the features of each policy. There are some that are mandated by the ACA.

Under the ACA it is no longer legal for health insurance companies to consider pre-existing conditions when offering you a quote or coverage. Your premiums are not based on your own health, but on your age and the average health status of everyone covered by that insurance. Unfortunately, they are also based on other factors that are out of your control, such as who’s buying the insurance, how many people are being covered by the plan, and the desired profit margin of the insurance company.

Federal law now allows you to have a limited health insurance policy or none at all without paying a fine. 

  • What you decide to do can be based on your comfort level with risk in addition to your health and financial ability to handle the cost of unexpected medical bills.
  • If you think the cost of ACA-approved health insurance is too high for the chance of needing uncovered medical care during a short interval, you can forgo these plans.
  • If you are not averse to risk, you can purchase a short-term policy that is limited to the benefits you think you will need or none at all.

How Health Insurance Protects You

The major role of health insurance is to limit the amount of money that you and your family spend on healthcare. Features that do this are:
  • Designating a maximum amount you’ll have to pay over a year; even in a worst case scenario, this is still the most you will pay for medical costs; and
  • Deductibles, copays, or coinsurance payments that limit the amount of money spent for medical services.
    • A deductible is the amount of money you will pay for medical care before the insurance will begin paying for it.
    • Copays are fixed amounts that you owe for most types of visit. They can begin before or after you reach your deductible, depending on your policy.
    • Coinsurance are fixed percentages that you owe for specific types of visits or less routine expenses. They only begin after you reach your deductible.
    • How these three work together can be quite complicated and is based on the terms of your policy.
  • Deductibles, copays or coinsurance payments, and maximum out-of-pocket renew each year and are frequently based on the premium amount. Most of these are the result of negotiations between your company, and the insurance company.
It is possible to have more than one health insurance policy. Since this is more expensive, it is important to coordinate the plans to avoid overlapping coverage where only one policy will pay for any service that you are paying both to cover. You can avoid this by designating one of them as a secondary health plan that only covers those expenses that your primary policy does not.

Medical costs are the leading cause of bankruptcy in the United States, even for those with health insurance. If you do not have health coverage, you are fully responsible for all medical costs and are more likely to experience bankruptcy. There are patient assistance programs that may be able to help. They can be found at the NeedyMeds website or by calling their toll-free number at 1-800-503-6897.

If you are getting health insurance from the ACA’s Health Insurance Marketplace, if your income is between 100% – 400% of the Federal Poverty Level you are eligible for a premium tax credit and/or cost-sharing reductions that lower your health insurance premiums. The American Rescue Plan Act (H.R.1319) — enacted to help with some of the economic and social difficulties from the COVID 19 pandemic — has several provisions to make health insurance coverage even more affordable than the original ACA subsidies. It would provide subsidies for those who earn over 400% of the Federal Poverty Limit if they need to spend more than 8.5% of their income to purchase the ACA benchmark silver plan.

When we think of health insurance it is usually the long-term or traditional policies that most of us have to renew every year. However, short-term health insurance is available to provide you with temporary medical coverage in certain situations. Short-term plans are usually renewed every 90 days and are not held to ACA standards.

Comparing Types of Health Insurance

It’s easy to get confused with all the terminology used in comparing types of health insurance, but there are some basic concepts to understand. 
Difference Other Considerations
Private vs  public insurance Private insurance is offered by insurance companies to individuals and groups, while public insurance is offered by the government and predominantly paid for out of state and federal budgets – Private insurance includes fee-for-service, managed care, COBRA, and catastrophic health plans. – Public insurance includes Medicare, Medicaid, TriCare, and VA insurance
Private vs public exchange A private exchange primarily sells group insurance to companies, while public exchanges sell to individuals Public health exchanges, the the ACA marketplace, are government run, private ones are not
On-exchange vs off-exchange On-exchange indicates that the policy was sold through a private or public marketplace, while off-exchange indicates that the policy was sold through an insurance agent or broker – On-exchange marketplaces are overseen by the government, off-exchange marketplaces are not. – ACA rules for coverage still apply
Group vs individual insurance policy An indemnity plan has no restrictions on your healthcare services, while managed care plans have preferred networks of healthcare providers. Managed care plans differ mainly in your ability to access network and non-network providers, or being responsible for costs for non-network providers in the event of an emergency.

Getting the Most Out of Your Health Insurance

Health Insurance Denials

Resources

What You Should Know About Provider Networks (PDF). Health Insurance Marketplace website.

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