Part Three: “Insurance – choices and types”
By Robin Lee Clark
As was stated in Parts One and Two in this series, we are in “healthcare limbo” and on a so-called ‘tightrope’, as we wait and watch the new healthcare plan (Patient Protection and Affordable Care Act, aka Obamacare) evolve and build toward full control of our overall healthcare system.
Our available options are being mandated by the system to be purchased by each of us (unless we qualify for Medicaid, Medicare or Disability). In 2014 we will be fined for not covering ourselves with insurance, whether it is with private insurance or the government ‘exchange’. If you choose to be part of the ‘exchange’, you will pay a percentage of your income. The percentage will depend on your income bracket.
“Private” insurance companies are being mandated through the new healthcare plan as well, dictating the terms of their coverage and how they operate – thus inevitably forcing these companies to raise premiums in order to follow these mandates and regulations (mainly, due to covering all pre-existing conditions and removing caps on coverage). The ‘exchange’ will be government-operated insurance, allowing the bureaucrats (much like the DMV or our Welfare system) to determine covered expenses and permitted treatments – most likely dictated by the economy and available funds for healthcare.
Choices within the Healthcare Plan
Private Insurance includes: Employer-sourced Group Insurance, Individual-sourced Insurance (for self or family coverage), Association-based Insurance (insurance entities linked with associations to create large risk pools) and Indemnity Insurance (incident/event coverage – not major medical). Later, we will discuss the differences between types of coverage and cost differences of your options for Private Insurances.
Exchange Insurance will begin being offered in January of 2014. This type of insurance will be run by the federal government, and will be offered to anyone whose income equals 133% to 400% of the government-determined poverty line in any given year. The cost for this coverage will be a percentage of actual income of the individual or family. The percentage begins at 3.8% for those making 133% of the poverty line, up to 9.5% for those making 300% to 400% of the poverty line. An example would be (given today’s poverty line), a family of 4 with a household income of $55,125 (250%) would pay $4,438 (8.05%) to be covered under the government exchange.
Medicaid Insurance is a state-run program, and is coverage for those who qualify as having an income at or below the government-determined poverty line (each state sets their own specific qualifications and coverage).
Medicare Insurance is a federal-run program, and is coverage for those over 65 years of age. Supplemental insurance is available, but must be purchased privately, to cover for specific needs.
Disability Insurance is a federal-run program, which covers those who have met qualifying medical needs criteria, and are unable to secure gainful employment due to their disability. (Short-term Disability is considered as Private Indemnity Insurance.)
Private Insurance: Your choices now
Employer-sourced Group Insurance is major medical insurance made available through your employer – often called Group Insurance (either an HMO or PPO). This insurance is offered at great discount due to a diverse risk pool. Pre-existing conditions are generally always covered under Group Insurances.
Individually-sourced Insurance is major medical insurance, available directly from private insurance companies to cover individuals and their families. These are considered high-deductible plans are eligible to be used in conjunction with FSA’s (Flexible Spending Accounts) and HSA’s (Health Savings Accounts). Rates for this type of insurance are based on deductibles, coverage limits and the health history of the covered individuals. Until 2014, this coverage has the highest rates, since there is no ‘risk pool’ with which to lower expectations of care.
Association-based Insurance is major medical insurance provided by a private insurance company that has linked itself with an association (typically a business or trade association) in order to create a large risk pool in order to bring costs down. These are also considered high-deductible plans are eligible to be used in conjunction with FSA’s (Flexible Savings Accounts) and HSA’s (Health Savings Accounts). This type of insurance is available to the general public, but a separate membership must be established with the association in order to apply for these lower rates. Typically, there is no criteria necessary to be members of these associations – a small yearly membership fee, however, is common and the association typically offers additional benefits (often indemnity or death benefit policies included with membership). But, until 2014, insurance underwriting may disallow coverage for pre-existing conditions under this type of insurance.
Indemnity Insurance is event and/or specified illness coverage. These are individual policies that cover specific illnesses or events, such as Accident coverage or Hospitalization coverage. These individual policies cover only items relating to each specified event and typically will pay a set amount for each incident. An example would be a broken arm from a fall might pay $250 on an Accident policy — whether the arm needed surgery (costing thousands) or just a brace. Some policies have various coverage payouts depending on severity, but most indemnity policies are set amounts of coverage per event. Often younger, healthier individuals with limited incomes find these attractive because of their affordability. Unfortunately, these policies can’t cover every perceivable complication, which major medical would cover (minus deductibles and co-pays). Coverage for pre-existing conditions is not guaranteed, and often denied under these plans. Insurance of this type are considered to have the specified illness policies available that cover such things as cancer and heart-related illnesses – but, these policies are more expensive.
(After 2014, Indemnity Insurance can only be considered an ‘add-on’ to a major medical option — Group, Individual, Association or Exchange. Indemnity policies are typically not offered to recipients of Medicare. And, Indemnity Insurance will not be considered a substitute for major medical coverage under Obamacare.)
Is this socialized Medicine?
Technically, no – only because we will continue to have the option to find and secure our own private insurance for ourselves and our families. But, the reality is, the mandates and regulations imposed on private insurance companies will either put these companies out of business or force them to raise premiums beyond affordable levels for the average American citizen. As I cited earlier in this series, the CBO has reported that such mandates on insurance companies and on individuals to purchase insurance will force millions in state-run Medicaid programs (over-burdening already stressed state budgets) and millions more into the government-run exchanges, squeezing out private insurance altogether.
* FSA’s (Flexible Spending Accounts) — http://en.wikipedia.org/wiki/Flexible_spending_account
* HSA’s (Health Savings Accounts) — http://en.wikipedia.org/wiki/Health_savings_account
Examples Individual Major Medical Companies:
(Currently, availability of companies varies from state to state.)
Blue Cross Blue Shield — http://bcbs.com/
CIGNA — http://www.cigna.com/
UnitedHealthOne — http://www.goldenrule.com/
Humana One — http://www.humana-one.com/default.aspx
Aetna — http://www.aetna.com/
Kaiser Permanente — https://www.kaiserpermanente.org/
Examples of Association-sponsored Insurance Companies:
(Several other Association-sponsored health plans do exist, but I was unable to find and source these for you at this time.)
Examples of Indemnity Insurance Companies:
(Aflac is exclusively an indemnity insurance provider. Most other insurance companies have indemnity health policies available. When contacting a major medical insurance company, ask about their indemnity policies.)