Individual Health Insurance Basics
Individual and family health insurance is a type of health insurance coverage that is made available to individuals and families, rather than to employer groups or organizations.
Individual and family health insurance can be purchased directly from a health insurance company or through an Exchange or Marketplace (Healthcare.gov, Washington Healthplanfinder). The reason to purchase health insurance through a Marketplace is if you qualify for tax credits and want to use them.
What kinds of individual and family insurance policies are available?
The major differences between plans are the choice of healthcare providers, up-front benefits and the maximum out-of-pocket costs. Most plans make use of healthcare provider networks. Healthcare providers within a network agree to perform services for health plan members at negotiated discounted charges. Many plans provide coverage when you use any provider, however, you'll have lower out-of-pocket costs when using network providers. Recently, in an effort to reduce premiums, we're seeing more Exclusive Provider Plans where there are no benefits when using out of network providers. If costs continue to increase we'll be seeing insurance companies offering smaller provider networks, eliminating out of network benefits or exiting the individual and family health insurance market. Bottom line, we'll be seeing much less choice for health insurance coverage in this segment.
How does a PPO plan work?
As a member of a PPO (Preferred Provider Organization) plan, you'll be encouraged to use the insurance company's network of preferred doctors and hospitals. These healthcare providers have been contracted to provide services to the health insurance plan's members at a discounted rate. You typically won't be required to pick a primary care physician but will be able to see doctors and specialists within the network at your own discretion.
You will probably have an annual deductible before the insurance company starts covering your medical bills. You may also have a co-payment for certain services or be required to cover a certain percentage of the total charges for your medical bills.
With a PPO plan, services provided by an out-of-network physician are typically covered at a lower percentage than services provided by a network physician, and out of network providers can charge you the additional amount they bill over and above the discounted rate you receive from an in network provider.
How does an EPO plan work?
As a member of an EPO (Exclusive Provider Organization) plan, you'll be required to use the insurance company's network of preferred doctors and hospitals in order for benefits to be payable. Out of network providers are not covered. Most plans allow coverage for out of network emergency care (some don't, so be sure to check) however, once stabilized, the care is no longer considered emergency care and will likely not be covered (be sure to know how your plan works).
How does an HMO plan work?
Though there are many variations, HMO (Health Maintenance Organizations) plans typically enable members to have lower out-of-pocket healthcare expenses but also offer less flexibility in the choice of physicians or hospital than other health insurance policies. As a member of an HMO, you'll be required to choose a primary care physician (PCP). Your PCP will take care of most of your healthcare needs. Before you can see a specialist, you'll need to obtain a referral from your PCP. Generally, there is no coverage for services provided by non HMO providers or for services provided without a proper referral from your PCP.
How does an HSA plan work?
An HSA Qualified High Deductible Health Plan (QHDHP) is a specific type of plan that conforms to established federal guidelines. QHDHPs are the only plans that allow an enrollee to open and contribute to a health savings account (HSA).
QHDHPs cover preventive care before the deductible – the ACA requires this of all plans – but under an QHDHP, no other benefits are provided until the insured has met the deductible. That means QHDHPs cannot have copays for office visits or prescriptions until the deductible has been met. With a QHDHP, you pay for everything other than preventive care until you satisfy your deductible. After that, you'll pay coinsurance until you satisfy your out of pocket maximum limit.
What is a co-payment?
A co-payment or co-pay is a specific charge that your health insurance policy may require that you pay for a specific medical service or supply. For example, your health insurance policy may require a $30 co-payment for an office visit or prescription drug, after which the insurance company pays the remainder of the charges.
What is a deductible?
A deductible is a specific dollar amount that you pay out-of-pocket each year before your health insurance policy begins to make payments for claims. Generally, the deductible applies only to major medical expenses such as advanced imaging, surgery or hospitalization. Once the annual deductible has been satisfied, you'll pay coinsurance for claims exceeding the deductible amount.
What is coinsurance?
Coinsurance refers to the amounts that you and the insurance company pay for medical claims, usually after the deductible has been satisfied. For example, if your health insurance policy has a $5,000 deductible with 30% coinsurance, you would pay 100% the first $5,000 (the deductible), and then 30% coinsurance for claims exceeding $3,000 until you satisfy the out of pocket maximum limit.
What is the Out of Pocket Maximum?
The out of pocket maximum is the most you will pay out of your pocket for claims incurred in a calendar year. For example if you have a $6,500 out of pocket maximum limit, on a $50,000 claim you would pay the first $5,000 (deductible) and then 30% of the remaining $45,000, until you satisfy the out of pocket maximum limit of $6,500. Once you have satisfied your out of pocket maximum limit of $6,500 in a calendar year, the plan will pay 100% of your covered medical claims for the rest of the calendar year. This includes covered prescriptions.
LEARN MORE ABOUT OUR TEAM:
Donna Quintana, RHU
Employee Benefits and Health Insurance Specialist
Shane Quintana, LUTCF
Business and Estate Planning Specialist
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