About Individual Health Insurance

Individual health care insurance provides coverage for only one individual, or family. In general, individual plans are more expensive than group insurance. You can obtain individual plans directly from a company who offers them. The company with whom you apply will evaluate you from a health standpoint, in terms of how much risk you present to them. Usually, they'll provide a questionnaire for you to fill out, asking various questions about your current and past health history. They will determine your risk accordingly, from which a premium will be generated.

Things to look for:
Most individual plans fall under managed health care plans. Under this, you can opt for an HMO, PPO, or POS plan.

Guaranteed renewable:
Your insurer cannot cancel your coverage if you become sick. If you continue to pay your insurance premium, coverage continues.

If available, group insurance is generally a better option, since it is usually more comprehensive and less expensive than individual insurance. However, individual coverage is ultimately better than being uninsured in the event of illness or injury. Although you may think you can do without health insurance, you are taking a major risk if you choose not to get coverage. An unexpected illness or serious injury can put you and your family under financial stress.

In a group insurance situation, the provisions of the policy are negotiated between the insurer and master policy owner (usually an employer or association). With individual insurance, you are directly in control of your policy. You can negotiate to have certain provisions included or excluded, and you can often choose your deductible amount and co-payment percentage. Keep in mind, however, that these things will have an effect on your premiums.

About Group Health Insurance

The continuing growth in the number of insurance plans where the employer or union assumes all or part of the responsibility for paying claims made the nations employers a principal bearer of the financial risks of illness and non-job-related injury in 1990. Group health insurance is better than individual in most cases- your premium will be lower, and your options greater. If you cannot receive group insurance coverage through your employer, then you'll need to seek out an individual plan.

2 basic group plans:
--fully insured
--MPP (minimum premium plan)

Under fully insured, your employer accepts all the risk for paying your claims.

Under MPP, your employer pays up to a certain specified maximum; after which point, the insurer pays. Most of these plans offer several types of coverage:

--basic coverage
--major medical coverage
--basic, plus major medical coverage

Majority of these plans fall under major medical, and don't contain a basic hospital benefit for hospital related expenses.


Employers Offering Health Insurance
Coverage varies from industry to industry. Most, if not all, state and local government agencies offer health insurance. Goods-producing firms are more likely to provide health benefits than are service-producing firms.

Coverage is less commonly offered by firms employing significant proportions of low-wage workers, that have a large proportion of part-time workers, or that experience high employee turnover.

About Managed Care Health Insurance

Managed care plans fall into 3 basic types plans:

-HMO
-PP0
-POS

A common trait among managed care plans is the incentive (usually, a lower premium) for the insured to stay within a specified network of health care providers.

Health Maintenance Organizations (HMOs)
HMOs provide medical treatment on a prepaid basis, which means that HMO members pay a fixed monthly fee, regardless of how much medical care is needed in a time period (usually a monthly basis). In return for this fee, most HMOs provide a wide variety of medical services, from office visits to hospitalization and surgery. There are exceptions but most HMO members must receive their medical treatment from those within the network.

Preferred Provider Organizations (PPOs)
A PPO is made up of doctors and or hospitals that provide medical service only to a specific group. Rather than prepaying for medical care, PPO members pay for services as they are provided. The PPO sponsor (usually an employer or insurance company) usually reimburses the member for the cost of the treatment, minus any co-payment fee. In some cases, the doctor may submit the bill directly to the insurance company for payment. The insurer then pays the covered amount directly to the health care provider, and the member pays his or her co-payment amount. The price for each type of service is negotiated in advance by the health care providers and the PPO sponsor(s).

Point Of Service (POS) plans
A point of service plan is a type of system where you pay no deductible and usually only a small co-payment when you use a health care provider within your network. You also must choose a primary care physician who is responsible for all referrals within the POS network. If you choose to go outside of the network for health care, you will likely be subject to a deductible, and your co-payment will be a percentage of the physicians charges.

About Hospital Health Insurance

Hospital expense coverage provides specific benefits for daily hospital room and board and usual hospital services and supplies during hospital stays.

Hospital/medical coverage may be extended in one of three ways:
-- A policy usually sold in combination with a physicians or surgical expense policy that provides benefits for both surgical operations and doctors in-hospital visits

--A major medical policy that provides broad and substantial coverage for many types of medical expenses

--A combination of hospital-physician-surgical coverage plus a supplemental major medical policy.

Room and board benefits are usually stated in one of two ways.
--Indemnity plans reimburse for the actual room-and-board charge up to a specified maximum dollar amount per day for hospital confinement.

--A service-type benefit that pays the full cost of a “semi-private” room-and-board charge.

About COBRA Health Insurance

COBRA is an acronym, which stands for Consolidated Omnibus Budget Reconciliation Act of 1985. Under this federal law, you are provided with a “back-up” system in a time of need, when you aren't currently covered by insurance for a variety of reasons.

This law was put in place to protect your right to continued health insurance, after a circumstance occurs which would otherwise leave you without coverage.

Some of those circumstances:
-involuntary loss of employment (lay off, downsizing, terminated)

-voluntary termination of employment (you quit)

-marital separation or divorce

-if you were a dependent on your guardian/parent’s policy, and you become ineligible (no longer dependent), due to age or no longer attending college

-if your spouse (who is the employee with the insurance coverage) dies

COBRA allows you to have the same coverage you had prior to the event/circumstance. The one thing to take note of is that your continued health benefits will only last for a specific amount of time, and will be entirely at your own cost. Under most cases, the time frame for continued coverage lasts 18-36 months.

A quick example:
You are currently employed, and your company pays for 50% of your insurance premium. You are included in a downsizing effort by your employer, and receive notice of termination. You can opt for COBRA, which will allow you to continue coverage. Instead of the 50% you had prior to termination, you will now be faced with 100% of the insurance premium cost. In some cases, this might be even higher, with the added cost going to administrative fees charged by your ex-employer. As mentioned above, the time frame can be anywhere from 18-36 months.

About Indemnity Health Insurance

Health insurance coverage can be categorized into 2 major categories:

-Indemnity plans
-manage care plans

Indemnity plans
An indemnity plan reimburses you for your medical expenses, regardless of who provides the service. In some situations/types of coverage, this amount may be limited. The coverage offered by most insurers is in the form of an indemnity plan.

Different plans use different methods for determining how much you will be reimbursed for your medical expenses. Below are some common methods of reimbursement:

Reimbursement--percentage of actual charges
Under this plan, the insurer pays a percentage of the actual charges for covered procedures and services, regardless of how much they cost. A common reimbursement percentage is 80%. This has the same effect as a 20% co-payment.

Reimbursement--actual charges
Under this type of plan, the insurer will reimburse you for the actual cost of specified procedures or services, regardless of how much that cost may be.

Indemnity
Under this type of plan, the insurer pays a specified amount per day for a specified maximum number of days. Although your reimbursement amount does not depend on the actual cost of your care, your reimbursement will never exceed your expenses.

About Medicare Health Insurance

Medicare is a federal program that provides health insurance to retired individuals, regardless of medical condition. Any individual who is receiving Social Security benefits will automatically be enrolled in Medicare at age 65 (age of eligibility). If you are not receiving Social Security benefits prior to age 65, you will be automatically enrolled when you apply for benefits at age 65. If you decide to delay retirement until after age 65, remember to enroll in Medicare at age 65 anyway, because your enrollment won't be automatic. Individuals who will be automatically enrolled in Medicare will receive notification by mail from the Social Security Administration, usually several months before your 65th birthday. Most people become eligible for Medicare upon reaching age 65 and becoming eligible for Social Security retirement benefits. Additionally, you may be eligible if you are disabled or have end-stage renal disease.

Coverage
Medicare coverage consists of two parts--Medicare Part A (hospital insurance) and Medicare Part B (medical insurance). Medicare Part C (Medicare+Choice) is a program that allows you to choose among several types of health care plans.

Medicare Part A (hospital insurance)
Generally called "hospital insurance", Part A covers services associated with inpatient hospital care (i.e., the costs associated with an overnight stay in a hospital, skilled nursing facility, or psychiatric hospital, such as charges for the hospital room, meals, and nursing services). Part A also covers hospice care and home health care.

Medicare Part B (medical insurance)
Generally called "medical insurance", Part B covers other medical care. Physician care--whether it was received while you were an inpatient at a hospital, at a doctors office, or as an outpatient at a hospital or other health care facility--is covered under Part B. Also covered are laboratory tests, and physical therapy or rehabilitation services, and ambulance service.

Medicare Part C (Medicare+Choice)
The 1997 Balanced Budget Act expanded the types of private health care plans that may offer Medicare benefits to include medical savings accounts, managed care plans, and private fee-for-service plans. The new Medicare Part C programs are in addition to the fee-for-service options available under Medicare Parts A and B.

About Health Savings Accounts:     How They Work

With a Health Savings Account (HSA) you divide the money you would normally spend for full coverage health insurance into two parts:

Part One

You buy a much lower cost medical insurance plan to cover big medical bills, called High Deductible Insurance, for instance medical bills above $5,050.

Part Two

You put the rest of the money you'd normally spend on health insurance into a 100% tax-deductible personal savings account. This money belongs to you; what you don't spend is yours to keep.

You can pay the insurance deductible and copayments from this account -- or simply save it.

Prior to 1997, if you did the same thing

Part Two was not tax deductible at all. You paid taxes on all the money personally used for medical expenses.

Because this is such a big tax break for you, the law limits your tax-exempt savings deposits to 75%) of the one-year deductible (65% for single persons). You can put that much aside each and every year.

If you choose a family deductible of $5,050, you can save $3,787.50 every year.

You Can Save It With Tax-Exempt Interest

You can save what you don't spend on medical care. You can invest your savings earning tax-exempt interest accumulation.

In order to qualify for the tax-exempt deposits to your Health Savings Account, you must have high-deductible insurance for the large medical bills (catastrophic insurance).

The largest insurance deductible permitted by law:

A Real Life Example

A sample cost comparison of insurance premiums on his plan for 42 year old couple:

For single person and other ages, phone us at 407-647-1616.

Permitted Annual Savings Deposit on the Plan (Tax Exempt)

You can deposit this amount or less to the tax-exempt savings account. Interest accumulates tax exempt.

How Medical Savings Account Money Can Be Used

1. Can I go to the doctor of my choice?

Yes.

That is one of the great advantages of the Medical Savings Health Plan. You are in charge. You pick the doctor. If you are not satisfied with the doctor, you change doctors.

You don't have to worry about the horror stories of a doctor who is prevented from giving care when there is a financial person in the background (the person you've never seen) who is saying, "No, No, No." With this plan you are in charge.

2. May Medical Savings Account money be used on medical expenses that do not count as covered expenses under the insurance policy?

Yes. This is another of the great advantages of the Medical Savings Health Plan.

The typical American is out-of-pocket a considerable amount every year for medical expenses that are not covered under the insurance plan, due to the fact that the plan may not cover dental, or because of deductibles and copayments.

The individual is presently paying all those amounts with after-tax dollars. If you have a daughter who needs her teeth straightened at a cost of $4,000, it will typically cost you over $6,000 in ordinary pretax income. With a Medical Savings Account, you are going to cut out all of the extra cost by paying for the dental work with your tax-free Medical Savings Account.

3. What kind of medical expenses qualify for favorable tax treatment under the IRS code?

In general, any treatment for an illness or injury and any preventive care, such as a mammogram, or a PSA test.

Medical Savings Accounts cover normal medical expenses that are usually not covered by traditional health plans, such as: dental care, glasses, and hearing aids.

Eligible medical expenses under the Medical Savings Accounts are medical expenses permitted under the Internal Revenue code.

4. Can the cost of dental care and eyeglasses be applied to the deductible on the catastrophic insurance?

No, the catastrophic insurance is conventional major medical which covers hospital, doctor, prescription drugs, and some preventive care costs like mammograms and PSA tests. You may pay the cost of dental and vision out of your savings account, and you are encouraged to do so, but that cost does not count against the deductible on the catastrophic insurance.

5. Can Health Savings Account money be used for nonmedical expenses?

Yes, but money withdrawn before age 65 for nonmedical purposes is subject to income taxes and a 15% federal excise tax. California has an additional early withdrawal penalty.

6. What happens to the money in my account that I don't spend?

At the end of each year, the money not spent will roll over into an investment account. You will earn interest on the money. The interest is not taxable unless you spend it for non medical purposes.

7. If I accumulate $40,000 or even more in my HSA, when I reach retirement age can I use the funds for living expenses?

Yes. At age 65 the MSA functions like an IRA. You can withdraw money without penalty, paying only normal income tax. And after retirement you can withdraw the accumulated HSA savings tax-free to pay out-of-pocket medical expenses -- like nursing home care and other expenses not covered by Medicare.

Key Details of the Health Savings Account Law

1. Who may set up a tax-exempt Health Savings Account?

A self employed person, or an employee in a small business with 50 or fewer employees.

In the case of the employee, either the employer or the employee, but not both, may make a contribution to the Medical Savings Account during any given year.

It is not necessary that the Medical Savings Account Plan be for all employees. The employer may offer this as an option, which could be taken by 3 employees, or 5 employees, or 10 employees.

2. What qualifies a health insurance plan to be paired with a Health Savings Account?

It must be a high-deductible, comprehensive, major medical insurance policy. The law requires annual deductibles of between $1,700 and $2,500 for individuals and between $3,350 and $5,050 for families. ("Families" include husband and wife coverage, parent and child(ren), or family coverage.)

3. Will a traditional high-deductible policy qualify? My policy has a $2,000 deductible per person. For my wife and me that would be $4,000.

No, that will not qualify. The law is specific and clear. For a family (2 or more persons), the deductible must be at least $3,350 for the family and not more than $5,050.

The traditional high-deductible policy does not fall within these requirements. Most traditional plans also have out-of-pocket costs that exceed those allowed under the MSA law.

4. Is it possible to only have a Health Savings Account without the qualifying high-deductible health insurance?

No.

5. How much can be contributed to a Health Savings Account each year?

A family may contribute up to 75% of the deductible amount. For example, if a family purchases a $5,050 deductible policy, the maximum the family can contribute each and every year is $3,787.50 ($5,050 x 75%).

An individual may contribute up to 65% of the deductible amount. So, if a single taxpayer selects a plan with a $2,500 deductible, the maximum amount that can be contributed every year to the savings account is $1,625 ($2,500 x 65%).

6. If a Health Savings Account is set up in January but the qualifying high-deductible coverage is not purchased until April, can the tax break be taken for the entire year?

No. The Medical Saving Account tax break does not apply for the months it is not paired with a qualified high-deductible insurance plan.

7. How do I set up a Health Savings Account?

Easy. When you or your employer purchase a high-deductible health insurance policy from Health Savings Insurance, we will automatically set up your account.

8. How do I get money out of my account if I need to pay a medical bill?

We provide you with a Health Savings Account voucher. The voucher is designed to function as an envelope. Fill in the voucher, enclose a copy of the bill, put both in the envelope and send it to us. We will pay the amount from your account and send you a check.