Health Insurance
Short Term Medical >
Short Term Medical Insurance is just that, it is a period of 1 month to 12
months of medical coverage. It works like a 100% plan. You choose a deductible
and co-insurance. Before the deductible is met you will pay 100% of the expenses
for doctor visits, prescription medicine, and hospitalization. After the
deductible is met you will either start the 100% benefit period (If you chose
the 100% co-insurance plan) or you will start meeting your co-insurance. After
the deductible and co-insurance are met the health insurance company will pay
100% of the medical expenses remaining. Short term is perfect for the in-between
jobs coverage, court ordered temporary medical coverage, and for recent college
graduates.
Traditional Plans >
Traditional Health Insurance plans include all or most of the following:
Co-pays
Doctor Co-pays of $25, $35, or $40, Rx Card with Co-pays $15 to $20 for Generic
and $35 to $50 for brand name.
Wellness Benefits
These are your annual physicals (OBGYN or Urologist visits). Sometimes the
Health Insurance Company will give you this Wellness Benefit right after you are
approved for coverage. Sometimes there is a waiting period of 12 months before
this particular benefit can be used. This health insurance benefit will vary
from $100 to $500.
Out-of-Pocket Maximums
With most major medical health insurance coverage there are defined
out-of-pocket maximums. What this means is that after you have met your
deductible and co-insurance. Then that particular out-of-pocket maximum has been
reached.
Out-of-Pocket Maximum Example:
Sally in Dallas, Texas is married and has a deductible on her health insurance
of $5,000. Her plan with the Health Insurance Company in Tulsa, Oklahoma is an
80/20 plan up to $10,000. Sally has to have hip surgery and the bill will run
around $24,000. This means that after meeting her deductible of $5,000. The
health insurance company will pay 80% of the next $10,000 and she will owe the
other 20% (her co-insurance portion). Her particular health plan states it pays
80/20 up to $10,000. This means the insurance company will pay $8,000 of the
next $10,000 and she will owe in addition to her deductible of $5,000 another
$2,000. So her maximum out-of-pocket for that surgery (year) will be $7,000. So
the health insurance company will pay $17,000 of the $24,000 and Sally will owe
$7,000. If in addition to hip surgery that year she has to have something else
done or is hospitalized. The Health Insurance Company will pay at 100%, because
she has already met her deductible and co-insurance for the year. She has
reached her out-of-pocket maximum.
100% Plans
There are a lot of different co-insurance plans out in the market place. There
are 90/10, 85/15, 80/20, 75/25, 70/30, 60/40, and 50, 50 plans. There are even
100% plans where after meeting your deductible you will owe nothing in
co-insurance.
100% Plan Example:
Same example as above except this time Sally in Dallas, Texas has a $5,000
deductible on her health insurance policy with a 100% co-insurance instead of an
80/20 co-insurance plan. Same surgery as before, but this time instead of owing
$7,000 she will only owe her deductible of $5,000. All of the co-insurance will
be paid by the health insurance company.
Health Savings Account (HSA)>
Health Savings Accounts or HSA's work a little bit different than traditional
health insurance plans. They cost about the same, but instead of everyone having
their own deductible to meet, the deductible is pooled together and everything
the family spends on medical expenses goes toward meeting their combined medical
deductible. The definition of medical expenses would be: Doctor visits, Hospital
stay, Surgery, Prescription drugs, and anything else covered under the HSA
policy. HSA's also work in 2 parts. You will have a part 1 the medical side such
as doctor visits, and hospitalization. Then you will have a part 2 the health
savings account side.
Part 1(Medical Insurance) Example
Ann in Garland, Texas and her husband (Bill) purchased a HSA with a $5,650
deductible. Ann went to the doctor and had some lab work done. The cost for the
visit and all the lab work done came to $250. In that same year Bill also went
to the doctor and had some lab work done. His cost for the visit and all the
work done came to $215. So far $465 has gone towards meeting their $5,650
deductible. In addition to doctor visits and lab work, anything they spend on
their health that is covered by the health insurance policy will go towards
meeting their deductible. Things like prescriptions, doctor visits, lab work
(shots, blood work, x-rays etc...) in-patient or out-patient surgery, and being
admitted into the Emergency Room or the hospital. All of these will go towards
meeting their health insurance deductible.
There are also 2 basic types of HSA's.
Comprehensive HSA:
When someone meets their deductible with the comprehensive HSA their
prescription drugs, doctor visits, and any other hospitalizations or surgeries
will be covered at 100% by their HSA Plan.
Catastrophic HSA:
When someone meets their deductible with a catastrophic HSA. The only things
that will not be covered at 100% will be the prescriptions and doctor visits.
Hospitalization and surgery will be covered at 100% and depending on the plan
lab work as well. Catastrophic HSA's will cost a little bit less than
comprehensive HSA's. This is the vantage point in getting a catastrophic HSA.
Part 2 (Savings Account) Example:
Ann and Bill who live in Garland, Texas decided to set up their health
savings account with an HSA Bank in Bartlesville, Oklahoma. They were only able
to do this after their medical side of the HSA was up and running. They had to
have proof of having a qualified high deductible health savings plan (HSA) in
place. Ann and Bill fall into a 28% tax bracket and when they are able to put in
the full amount of $5,650 the tax savings will be $1,582. If there was a state
tax as well it there would be an additional savings. Tax savings means in a nut
shell the government is writing you a check for $1,526. This is probably the
number one reason why people are getting Health Savings Accounts set up. The
second reason would be the interest earned on tax-deferred money and knowing you
have money for any unexpected doctor visit or surgery/ hospitalization. You also
will have a defined out-of-pocket maximum for the whole family.