Individual And Family Health Insurance

The Need

With the rising costs for healthcare, not only is individual health insurance a necessity, it is a must. Below are the typical cost for some medical procedures:

  • Open Heart Surgery – $324,000
  • Repairing Rotator Cuff – $40,000
  • Broken Arm – $12,000
  • Broken Leg – $20,000
  • See More For Yourself At Cost Helper

Unless you have a few million dollars tucked away under your mattress or in a bank, you are like most people that would feel the pain of cutting a 5 or 6  figure check. What health insurance does is protect you from unlimited loss in the event something catastrophic occurs. Instead of paying $20,000 for a broken leg, you end up limiting your loss to maybe $2,000 (depending on your plan). The trade off is that you pay a monthly premium to the insurance company to cover the risk.


The Lingo

Before we talk about your options let’s take a minute to demystify some of the terms commonly used by insurance companies and agents.

Let’s pretend John has a family and they have the following plan:

  • Deductible (Embedded) –  $1000/$2000 (Individual/Family)
  • Co-Insurance – 80/20
  • Max Out Of Pocket – $2,000

John thought it would be a great idea to go skiing, but ended up breaking his leg. Now he is looking at a $20,000 procedure.

  • Deductible – This is the amount that you will pay 100% of before Co-Insurance will start to take over. The one caveat is whether you have an embedded or aggregate deductible. An embedded deductible means that if a person is paying for a procedure and are on a family plan, that person will only pay the individual deductible before co-insurance will take over. So in this case John will only pay $1,000. If he had an aggregate deductible, he would have to pay the whole $2,000 before he meets his deductible requirements.
  • Co-Insurance – Co-Insurance is usually defined by a percentage split. In this case, it is 80/20. This means that the insurance company will pay 80% of the costs and you will pay %20 of the costs after the deductible is met. Co-Insurance will be in effect until you hit the Max Out Of Pocket amount. The max out of pocket amount typically does not include the deductible, but make sure to check with your agent as each carrier may treat it differently. In this example, John will pay $2,000 and the insurance company will pay $8,000 for the Co-Insurance.
  • Payments Against Claim –The total paid towards the medical claim is now:

Deductible + Insurance Part of Coinsurance + John’s Part of Coinsurance = $ 1,000 + $8,000 + $2,000 = $11,000.

But wait…what happens to the remaining $20,000-$11,000 = $9,000 of the costs…well the insurance company will pay the rest. So for the $20,000 procedure, John only has to pay $3000 and the insurance company will pay $17,000.

Click Here – For another illustration of how your plan works.


The Options

  • Health Savings Account – HSA plans typically only have a deductible that can range anywhere from $1,500 to $10,000 depending on the plan. This means you will pay 100% of the cost of care and drugs until you hit the deductible, but once you hit it you are done paying for that year. These plan are a great option for people who are healthy and are only looking for coverage in the case of a catastrophic illness. Furthermore, you can contribute into your health savings account with pre-tax dollars, which helps reduce your taxable income. For 2013 the maximum individual contribution into an HSA is $3,250 and for a family it is $6,450.
  • Preferred Provider Organization (PPO) Plan -These are the plans that most people think about when they think of health insurance. These plans typically have a deductible, co-insurance, out of pocket max, and co-pays. These plans are typically very comprehensive and the co-pays are great for a person who has frequent doctor visits or are on a lot of medication, which would make paying 100% of the costs with an HSA too expensive. Furthermore, you have a wide selection of in network doctors to choose from. You also have the choice to use out of network doctors, but the costs are usually higher and the insurance carrier may not pay as much for procedures. The only drawback to a PPO plan is that the plan typically has the highest premiums.
  • Health Maintenance Organizations (HMO) – These plans typically limit you to using doctors and facilities that are part of the HMO network. Typically these plans include the same components as a PPO plan. In some cases, the premiums of the HMO can be more competitive than that of a PPO plan because of the efficiencies that come with the HMO structure.


Next Steps

If you are interested in speaking with one of our agents, feel free to Contact Us or if you would like to run yourself some quotes, Click Here.

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