Primer on health insurance
- November 6, 2009
- 0 comments
- Posted in Health Insurance, Latest Posts
What are you up against, between now and the time any reforms start clicking in? What you’ve got now: A private health-insurance system that will grow steadily worse, as the insurers try to game the changes (and pocket the maximum profits) in advance. Premiums and co-pays will rise. More routine illnesses will be classified as uninsurable, pre-existing conditions. It will become riskier than even to retire early without health insurance or quit your job to start your own business.
If you don’t have health insurance (or good health insurance), you don’t have—can’t have—financial security. A single, unexpected illness can blow you out of the water, taking your savings and your future with it. Here, a few suggestions for people with different types of coverage:
–Employees. You might be offered a choice between an “affordable” policy with a low-ish premium and a high deductible and a policy with a higher premium but a low deductible. If everyone in your family is healthy, you’ll probably go for the lower-premium plan. It often comes with a health savings account that let you save money for certain future medical expenses, tax free. Your employer might even contribute to the account. These lower-cost plans will save you money as long as none of you gets seriously ill. If illness strikes, however, you might have to pay a lot out of pocket that year.
If someone in your family is already in poor health, chose the policy with the lower deductible. You’re paying more but you’re also getting more insurance coverage, which you might need.
Compare the two plans by adding up the maximum each one would require you to pay every year if a serious illness strikes or your newborn is premature or requires special care. Compare it with the premiums and co-pays each plan charges. That will help you decide.
–Early retirees. Fewer early retirees are getting company health insurance. Those lucky few are seeing premiums and co-pays rise and benefits cut. If you plan to move away from the town where you live now, you might not be able to take your retiree insurance with you.
You hear lots of talk about “job lock”—workers unable to leave their companies because they need to keep their health insurance. There’s also “place lock”—retirees who have to stay in place in order to keep the coverage they have. If you move away, you’ll probably have to apply for a policy from scratch, and risk being turned down (or charged a fortune) if your health isn’t perfect. You’re not free to move until both spouses hit 65 and go on Medicare. The government program covers you wherever you live.
–Former employees, now on COBRA. COBRA lets you stay in your current group plan for up to 18 months at your expense (or three years, for widows, widowers, and the divorced). It’s high-priced insurance. You might find a different plan with a lower premium, although the coverage won’t be as good. If you do take COBRA, you’re locked in place for as long as the policy lasts. You lose the plan if you move beyond that insurer’s coverage area.
–Individuals. People who have to buy their own policies in the private market are more disadvantaged than anyone else. Insurers will turn you down if you have various types of illnesses, or charge you a premium that you can’t afford. You might have to take a high deductible policy that pays only in the case of a major illness. If you do file a big claim, the insurer will sometimes search through your past medical history to find reasons to cancel the coverage and reject your bills. If you keep your policy, the insurer will jack up your premium. Many policies sold to individuals are described as “limited benefit,” meaning that they cover much less of your bill than you thought.
–Kids. In many states, adult children can stay on their parent’s family plan until they’re 23, 25, or even 30, depending on the state. They might have to be unmarried or financially dependent, but not always. For your state’s rules, go to StateHealthFacts.org, click on your state, then on “Managed Care and Health Insurance,” then on “Dependent Coverage.” (Note that state rules don’t apply to big companies that self-insure their plans. They can set any age limit they want.) If your 20-somethings can’t be on your plan and aren’t covered at work, they can buy their own at rock bottom costs, provided that they’re in good health. If necessary, parents should consider giving them a hand.
Tags: buying health insurance, children and health insurance, COBRA, private health insurance market
