Frequently Asked Questions (FAQ)
Everyday we receive numerous questions from consumers who are shopping online for Individual Health plans. To quickly answer common questions, we have created this section on our Web site to assist you in educating yourself to make an informed decision. Our licensed agents will gladly discuss these questions in more detail or review any other health plan topics that you want to understand.
- What Are Out-of-Pocket Costs?
- How Are Premium Rates and Out-of-Pocket Costs Linked?
- Can The Plan Include Preventative Care?
- Why Does This Plan Cost More Than The One From My Last Job?
- Will This Plan Work Just Like The One From My Last Job?
- Does The Advertised Premium Rate Always Match The Final Rate?
Deductible: This is a predetermined amount of money that the insured must pay first before the insurance company will begin to consider reimbursing for covered medical expenses. For example, if you have a $500.00 plan deductible, the insurance company will not pay anything towards the cost of your bills until $500.00 worth of claims are reached. Only claims over $500.00 will be considered by the insurance company for payment.
Co-insurance: This is usually stated as percentage in your policy. It is the cost you are expected to share with the insurance company when charges are paid. For example, if you have already satisfied your plan’s deductible, and the insurance company approves $1,000.00 worth of charges, the insurance company then pays a portion of them (say 80% or $800.00), and the balance (20% or $200.00 of co-insurance) will be the insured’s responsibility to pay.
Co-payment: This is usually a fixed dollar amount that is attached to each specific type of medical expense and is expressly defined in the plan’s benefits. For example, a visit to your primary care physician for a physical may cost you a $15.00 co-payment. The balance of the cost for this service is then paid by the insurance company.
With any individual health insurance policy, you pay a premium based on various factors such as your age, where you live, and the status of your health. Another factor that has a substantial influence on the premium you will pay is the level of plan benefits you select. When choosing a plan, it is important to understand that you cannot pick the lowest premium rate and also expect to have the lowest out-of-pocket costs. These two factors work in opposite ways.
For example, if you decide to reduce your out-of-pocket costs (by lowering your plan’s deductible, co-insurance, and co-payments), this decrease will drive up your plan’s premium cost. Conversely, if you decide to reduce your plan’s premium costs (by raising your plan’s deductible, co-insurance, and co-payments), this increase will drive up your out-of-pocket costs. You cannot have it both ways. That is, low premiums and low out-of-pocket costs cannot go together.
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Preventative care coverage varies depending on the insurance carrier and the plan you select. Recent market trends have made this benefit more popular, and many times it is automatically included in the policy. Keeping the insured healthy has also become a goal of the insurance companies to help reduce their long-term costs. Some examples of preventative care benefits include routine physicals, mammograms, PAP and PSA tests, and child immunizations. Best of all, most plans will pay for these costs (up to a limited dollar amount) regardless of deductibles and co-insurance.
For example, if your health plan has a $1,500.00 annual deductible and the plan benefits are paid on an 80% / 20% basis, you might think all your preventative care would probably be paid out-of-pocket by you because they will get applied to your annual deductible. However, the insurance carrier usually sets aside the deductible and then pays 80% of the cost (up to a certain dollar amount). This substantially reduces your cost for preventative care and is the reason why many individuals with high deductible policies can benefit from this type of plan.
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Most people in the United States still get their health insurance coverage through employer-sponsored policies. These plans are highly regulated and include some very unique features that differentiate them from Health Insurance purchased directly by individuals. The most significant financial difference is that employers are mandated to pay a portion of the cost for their employees’ health insurance premiums. Only the balance of the premium is paid by the employee through a payroll deduction.
When shopping for an Individual Health Insurance policy, you will be responsible for paying the full premium cost. Since you are buying the plan on your own, there is no employer to help shoulder the expense. Studies have shown that employers, on average, pick up 75% (or more) of their employees’ health insurance premiums. Although the full cost (both the employer and employee amounts) of your employer-sponsored plan may be more than the individual health insurance plan you have selected, it is really your employer’s contribution toward the premiums that makes the health plan at your last job look so much more affordable.
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When most people go to work at a company, they can usually choose between a few different employer-sponsored health insurance plans. These plans have been designed for this specific employer and the employee has little choice in altering the terms of the policy. When you apply for an individual health insurance policy, many of the benefit choices can be customized to fit your budget and lifestyle.
In addition to having the ability to modify your plan’s benefits, employer-sponsored plans can sometimes have a lot more regulation that governs the benefit terms. For example, in most employer-sponsored plans, maternity coverage is mandatory. In most individual health insurance plans, this is an option that must be added to the benefits. To ensure you get the coverage you need, make sure you fully understand the benefit terms, limitations and exclusions of your individual health insurance plan.
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When shopping for an Individual Health Insurance plan, keep in mind that the “quoted rates” are simply an estimated amount based on your age and the geographic region in which you live. The final factor that is yet to be determined is the exact “status” of your health. Once your application has been completed, it is sent to the insurance company’s “underwriting” department where they perform a careful assessment of your health.
Once the insurance company has estimated your specific health risks, they will place you into one of a the underwriting categories: Approved – Preferred Rate, Approved – Standard Rate, Approved – Non-Standard Rate, or Application Denied. Therefore, depending on the health of the applicant(s), your final rate may be the same as quoted, higher than quoted, or possibly lower.
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