Bowman Insurance and Benefit Services

Health Insurance

The health insurance industry has changed dramatically in the past several years.  Healthcare costs have risen significantly and the cost for monthly coverage is a growing concern.  The recent Health Care Reform has implemented many new features to health insurance, including preventive care being covered 100%, dependents being allowed to remain on their parents’ plan until age 26, and no lifetime maximums.  There are other stipulations of coverage that will be added throughout 2013 and 2014.  Typically, finding the right plan requires a good understanding of availability, coverage, and price sensitivity.  The right insurance agent will offer options from multiple health insurance carriers.

Currently, there are a few different ways to obtain coverage:  enroll in an employer-sponsored plan, apply for an individual plan, or enroll in a state-run plan.  There are two main types of coverage:  Preferred Provider Organization (PPO) plans or Health Savings Account (HSA) plans.

PPO

PPO plans normally have co-payments for doctor visits and prescription drugs.  There are many different ways to structure plans to change the co-payment amounts, raise the deductibles, or include additional benefits such as dental and vision coverage.

HSA

HSA plans are much different because there are not any co-payments for any medical service, but there is a high deductible.  In an HSA, you pay the “negotiated rate” that the insurance company has with the doctor, pharmacy, hospital, etc.  Every medical expense goes towards satisfying the deductible.  Once that deductible has been met, the insurance will pay a certain percentage based on the plan design—usually 100%, 90% or 80%.  By design, the plan encourages you—by allowing tax deductions—to pay these medical expenses through a savings account specifically set up for your medical expenses.  The IRS allows you to deposit as much as $3,100 (individual) or $6,250 (family) per year for the tax deduction on that amount.  (Each year, the contribution limit will change; for 2013, the limits are set at $3,250 and $6,450.)  When you have a medical expense, you simply use the debit card associated with that account.  While it is not necessary to have a bank account specifically for medical expenses, the tax savings are a nice benefit to the plan’s already lower monthly cost.

Employer sponsored plan

No matter the type of plan (HSA, PPO, HRA, FSA) an employer offers, the employer must pay at least 50% of the employee’s premium.  Dependents may be added for additional cost.  Maternity coverage is normally included in employer-sponsored plans.  There is an open enrollment period, usually two months, each year where you can make changes, like adding spouses or dependents to the plan.  There are, however, qualifying events that will allow you to make changes throughout the year—qualifying events like marriage, the birth of a child, or your spouse losing their coverage in a different plan.  You are eligible to join the plan upon being hired and satisfying the group’s waiting period, which is typically 30, 60, or 90 days.

Individual Plans

You must apply for coverage, and the carrier determines your eligibility based on medical history.  Insurance companies can decline individuals altogether, or they may instead choose to exclude specific conditions or raise monthly premiums based on that health history.  The Health Care Reform Bill (PPACA) should limit insurance companies’ ability to deny or restrict coverage; this is planned to take effect in 2014.

Maternity coverage is available on individual plans, but there is normally a waiting period of 12-18 months before the coverage benefits are available.  Fewer companies are offering maternity coverage on an individual policy.

State-Run Plans

Each state has a plan available for those that have been declined by individual health insurance companies and are not eligible for an employer sponsored plan.  There are also state-run programs available for low-income families.