Wednesday, July 31, 2013

Choose the Right Private Medical Insurance For You and Your Family

A For-Profit Enterprise In The United States
Except for seniors that qualify for Medicare, or the poorest of Americans that have access to Medicaid, people in the United States purchase health care coverage from private, for-profit companies.

Up until recently, Americans could simply choose not to purchase health care coverage. This is changing with the recent passage of the "The Patient Protection and Affordable Care Act" by the U.S. Congress. Starting in 2014, most Americans will have to be covered by a health care plan purchased from the private health care insurance market.

Health Insurance Is A Good Idea...How To Start
Irrespective of whether medical coverage is mandated by law or not, it is a smart choice to have it and to make sure that you purchase the right plan for you and your family.

Making the right choice when purchasing a private medical insurance plan depends upon three sets of information for you to assess before making a decision.

The first one is easy - are you offered health care coverage through your employer? More on this below.

Next is for you to make a thorough assessment of your current and near-term medical care needs.

After understanding the coverage you and your family need, you should know the parts of health care insurance that will add up to be costs taken directly out of your pocket when you and your family receive care.

This article will take each of these considerations in turn.

Plans Offered Through Your Employer Can Be Your Best Bet
Is health care coverage offered as an employee benefit where you work? If so, then you usually do not need to look any further for the right medical plan for you and your family.

You will almost always get the best deal in healthcare coverage that meets your medical needs by assessing and choosing from among the plan options offered from your employer. Individual premiums and other out-of-pocket expenses for the members of an employer plan are determined based on the group, not each individual member.

Because the group represents a better risk for the insurer, each individual member benefits through lower out-of-pocket costs for receiving medical care. An easy mistake to make with this option is missing the deadline set by your company for open enrollment each year. Pay attention to the due dates for making your choice of plan, or you may have to wait a year to get coverage that is offered by your employer.

Employer Plan Or Not, Make The Right Choice For You
Irrespective of whether you have access to health care coverage through your job, or if you must purchase it directly from the individual health insurance market, making the right choice for you and your family begins with a good understanding of your medical care needs - and this includes forecasting probable needs.

For example, a young, healthy, 20-something year old single man doesn't have the same forecast of health care needs as a 40-something husband and father of young children.

The single fellow may simply need to forecast that there is a slight chance he could be in a car accident resulting in serious bodily injuries - for which he would want to be insured against major financial loss. The husband and father of young children might forecast the possibility of another child on the way or that his young children will need both routine and illness care from a physician.

While maternity or well child care is not important to the single man with no plans of marrying in the next year, it is very important to the man whose wife could be pregnant before the year is up. An individual or family's anticipated medical needs determine which plans are not a good fit.

Not Understanding Your Out-Of-Pocket Costs Is Expensive
Once you understand where you will buy coverage, i.e. through your employer or directly from the individual market - and your medical needs are forecast - the next task to prepare for making the best coverage purchase is to know the terms used in health care plans that describe your out-of-pocket costs for receiving care.

Knowing these terms will help you know what you can expect to pay directly and what the insurance plan will cover. This way, you can balance your forecast of medical needs against your direct cost in order to make the best financial choice for medical care. These terms are covered next.

Health Insurance Terms You Should Know
The premium is what you pay for the insurance coverage. This is calculated as a yearly charge but, especially in the case of an employer plan, can be paid in monthly increments.

You will most likely pay a higher premium for a comprehensive plan that covers items like maternity care or well child doctor visits. However, compare the premium you pay each month (or that is deducted from your paycheck) with your remaining out-of-pocket costs. A good rule of thumb is that the more comprehensive plans will charge a higher premium but your costs for expected services during the year are more predictable.

Co-payment is a fixed amount, e.g. $15, that you pay out-of-pocket for a specific medical service like a doctor visit; your plan pays the rest of the cost. A co-payment is usually associated with a health care plan that requires you to use a network of doctors and other health care providers where the plan has prearranged fees.

The catch is that you have to use a doctor in the network to take advantage of paying only the fixed co-payment charge. However, if you need predictable health care expenses, this should not be a problem.

Co-insurance is a percentage of the medical services you receive, e.g. 20%, that you pay out of pocket; your plan paying the remaining 80% in this example.

You usually have more choice of doctors or other health care providers with this type of arrangement, but you can end up paying much more out of pocket if you seek medical care often. Your yearly costs with this type of plan are less predictable when compared to a comprehensive managed care option.

Another financial term you need to consider is out-of-pocket maximum. This is the most your plan will require you to pay directly for medical services in a given year.

A deductable is the amount you must pay out of pocket before your plan will start paying anything for medical services you receive.

Pay attention to the lifetime maximum. After reaching this amount, your plan will no longer pay anything for medical services you may need.

Summing It Up All Up
In summary, choose health care coverage through your employer if it's offered as a benefit; forecast the health care services needed by you and your family; and know the basic terms of the health insurance business to choose the best plan at the best out-of-pocket cost for you.

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