Find Low-Cost Insurance
As an informed consumer, understanding the building blocks of health insurance can help you avoid confusing, even misleading, lingo, which will ultimately end up saving you money. Regardless of the particulars of any plan, some concepts are applicable to all of them.
Currently, insurance plans fall into two categories: group coverage and individual coverage. Group plans are provided by an employer, government agency or worker’s union while individual plans are negotiated between an individual policyholder and their insurer. Generally, group coverage is less expensive because the provider pays most of the premium for the user.
If a group insurance plan is available to you, it will probably provide more comprehensive coverage than an individual plan. This is because group plans pool policies within an organization and ultimately reduce costs for insurers. Under these plans, you’re more likely to be covered for maternity care, well-baby services, preventive care, vision and dental care.
Keep in mind that the way your group plan is set up can make a difference. Group plans are either self-funded or fully insured. What this boils down to is who makes decisions regarding your coverage.
Self-Funded vs. Fully Insured Group Plans
In a self-funded plan, your employer pays all medical costs and assumes all risk for its employees. Instead of paying a fat premium to a partner insurance company, self-funded plans are allowed to calculate a maximum annual risk and then keep that amount in reserve until it might be needed. For instance, if it’s anticipated that a company’s maximum risk is $1.5 million per year, the company is allowed to keep that money and even invest it. At the end of the year, anything that wasn’t spent out of these funds goes back into the company coffers.
In what’s called a fully insured plan, an employer partners with an insurance company and pays it a premium to manage its employees’ health care claims. The premium amount is based on the company’s maximum annual risk, and the insurer assumes all administrative and legal responsibilities related to claims management. If we use the same example as above, the $1.5 million potential risk is paid directly to the insurer, where it remains regardless of what is spent.
Individual plans are sometimes referred to as single-payer plans. You purchase an insurance plan independently from the open market and your employer is not involved. Single-payer plans are generally much more expensive than group coverage and provide limited coverage.
But if you haven’t qualified for these programs in the past, you may soon–one of the major features of Obamacare is the expansion of public insurance eligibility. By the start of 2014, for example, new provisions from the Affordable Care Act will come into effect and an additional fifteen million low-income Americans will qualify for Medicaid.
My Story: "For 7 Years, I’ve Had No Health Insurance"
Freelance writer Nida Khan, who is asthmatic, is the first to admit that, despite the fact that she’s been without health insurance for 7 years, she’s been extremely lucky.
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“Even though I’ve had my share of annoying health issues to deal with, including difficulties buying my inhalers, there are so many other much-more-horrible stories out there of people suffering needlessly, and dying, just because they didn’t have coverage.”
Nida’s story is one that the 48 million uninsured people in this country can immediately identify with. A study conducted at the Harvard Medical School and Cambridge Health Alliance (released in 2009) found that nearly 45,000 deaths a year are associated with lack of health insurance. According to its data, uninsured working-age Americans have a 40 percent higher risk of death than those who are insured.
“My last full-time job was in 2006. And, subsequently, that was the last time I enjoyed health benefits. The past seven years have been a mixed bag of prayers to not get sick, to waiting to see a doctor until it’s absolutely and utterly necessary. Forced to freelance out of necessity because of a lack of work, I remember how tough it was. I only go to the doctor when I’m tired of self-diagnosing and cold medicine simply will not suffice. These past seven years have been a combination of uncertainty and gambling with my own health. I recall the frustration of not being able to go to a doctor that knew my history, and that could really dedicate time to diagnosing what was wrong. And I remember the embarrassment of finally accepting charity care as a last resort when things reached a tipping point during this time period several years ago.”
Researchers at the London School of Hygiene and Tropical Medicine conducted a study of preventable deaths in 19 industrialized nations and found that the U.S. came in last place. Released in 2008, the ‘Measuring the Health of Nations’ report focused on deaths before the age of 75 that are potentially preventable with proper and timely health care. And let me repeat, we came in last place.
When asked about her opinion of why certain government factions, as well as a portion of American society, has been so resistant to the Affordable Care Act, Nida has a very simple answer: “politics.”
“It’s always about money, it’s always about politics. It’s rarely about making sure that the people who make up this country are properly cared for. It’s inexcusable. And it is mind boggling that in the most powerful country on the planet, we let millions go uninsured and underinsured. Perhaps that is what so many are fearful of, that if we have a healthier population, we may in fact have a more productive population that starts paying attention and sees political posturing for what it is — a game. Well, game over. On October 1st, the law went into effect, and I for one will be sure to sign up. I’ve literally had a countdown to this day.”
Nida says that once she signs up for the insurance she’s been without for all these years, she already has her list of appointments she wants to make.
“When you’re uninsured, you’re often forced to neglect certain steps you really do need to take to stay healthy. Preventive care becomes a luxury that you can’t afford. I actually can’t wait to get a basic checkup, and to get some blood work done. I”m enthusiastic about checking my cholesterol level, and making sure all of those types of things are okay.”