Health Insurance Coverage
What is health insurance for and why do you need it?
- Health insurance pays the medical expenses for illnesses and injuries.
- Accidents and health problems occur unexpectedly at any time
- Medical expenses are high – top cause of bankruptcy
- To gain access to a network of doctors and hospitals that have negotiated lower rates with insurance companies
- To protect your way of life and your family’s physical and financial wellbeing
Health Insurance Terms
- Deductible: A set of amount you have to pay per year before the insurance company starts paying it. There are some plans with no deductible.
- Premium: A set amount of money you pay to the insurance company to keep the policy active. Most people like to pay monthly.
- Coinsurance: Percentage of the medical bill you share with the insurance company after you’ve paid the deductible. Unless you have a policy with 100% coverage for everything, coinsurance is mandatory. For instance, for a $100 doctor’s bill with a plan that pays 80%, your coinsurance due is 20%, or $20.
- Copayment or Copay: A flat fee you pay every time you go to the doctor or fill a prescription. Usually, a copayment is a relatively small dollar amount, and it doesn’t count toward the deductible.
Types of Plans
The Patient Protection and Affordable Care Act (PPACA) requires all individual and small-employer group plans to cover a standardized package of services. These services are known as essential health benefits.
The essential health benefits include the following items and services: ambulatory patient services (outpatient care you get without being admitted to a hospital)
- Emergency services
- Hospitalization (including surgery)
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment (including counseling and psychotherapy)
- Prescription drugs
- Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
- Laboratory services
- Preventive and wellness services and chronic disease management pediatric services, including oral and vision care.
Paying for Coverage
The law doesn’t require employers to contribute toward health benefit plan premiums. Many insurance companies, however, require employers to pay at least 50 percent of their employees’ plan premiums. Employers may choose to pay a higher percentage than the company requires.
Employers are usually not required to contribute toward the cost of dependent coverage.
Premiums may increase at each renewal term because of rising health care costs. State law also protects businesses who buy small-employer health insurance by prohibiting insurance companies from discontinuing coverage without a reason.
Businesses with 25 or fewer full-time equivalent employees that pay at least 50 percent of premiums and pay average annual wages below $50,000 may be eligible for a tax credit of up to 50 percent (35 percent for nonprofits) of the premiums the business pays if it buys coverage through the federal small-business health options program, called the Small Business Health Options Program (SHOP).
For more information, visit www.healthcare.gov/will-i-qualify-for-small-business-health-care-tax-credits.
How Insurers Calculate Small-Employer Plan Premiums
Insurance companies base the amount employers pay for insurance on the specific benefits package and cost-sharing levels chosen by the employer. The health status of employees won’t impact rates. Insurance companies will consider the following factors:
- Age of employees: Older people usually have more expensive and more frequent health-related claims. Generally, the older your workforce, the more your plan will cost.However, federal law prevents insurers from charging more than three times more for older employees than they charge for younger employees.
- Tobacco use: Federal law allows health plans to charge tobacco users up to 50 percent more. A group with more tobacco users will pay higher rates than a group with fewer tobacco users.
- Geographic area: Health care costs vary by region because of differences in the cost of living and the number of providers in the area.
Small employers don’t have to offer health insurance to their employees, but employers that do must make it equally available to all employees working 30 hours or more per week (not on a temporary or seasonal basis) and their dependents.
In general, insurance companies require at least 75 percent of a small employer’s eligible employees to participate in the health plan.
Companies must always round down to the nearest whole number when calculating the number of participating eligible employees. For example, a business with five employees would achieve 75 percent participation if three eligible employees participate. Seventy-five percent of five is 3.75, and 3.75 rounded down is three.
Insurance companies that offer small-employer coverage must make it available to any employer who applies year round. However, if the employer doesn’t meet the minimum participation requirements, availability may be limited to the federal open enrollment period running from November 15 through December 15 of each year.
Federal Health Care Reform Requirements
Small businesses with fewer than 100 full-time plus full-time equivalent employees won’t face a penalty if they don’t provide health insurance to their employees.
Federal law defines a full-time employee as one who works at least 30 hours during a typical week. The law counts each 120 hours worked by part-time employees in a month as one full-time equivalent employee.
Consider a company that employs 30 full-time employees who work at least 120 hours each per month and 24 part-time workers who average 80 hours each per month.
To convert the part-time employees’ hours to full-time equivalent employees, multiply the number of part-time workers by the average number of hours they work each month: 24 x 80 = 1,920. Then divide the total number of hours worked by 120: 1,920/120 = 16. To get the total number of full-time equivalent employees, add this number to the number of full-time employees: 30 + 16 = 46. Thus, the employer in this example has 46 full-time equivalent employees and qualifies as a small employer under the law.
How does Medicare work?
Medicare is a federal health insurance for people of age 65 or older, certain people under 65 with disabilities, and people of any age with End-Stage Renal Disease (ESRD).Medicare allows to choose the way you receive your benefits. Newly eligible seniors who are drawing Social Security benefits are enrolled automatically in the Original Medicare Plan.
Your copy of Medicare & You explains the Original Medicare Plan and other Medicare health plan in detail. It also has explanation on how to enroll in other health plan options.
Below are different parts of Medicare:Medicare Part A (Hospital Insurance) covers:
- Inpatient care in hospitals
- Skilled nursing facility care
- Hospice care
- Home health care
Medicare Part B (Medical Insurance) covers:
- Service from doctors and other health care providers
- Outpatient care
- Home health care
- Durable medical equipment
- Many preventive services
Medicare Part C (Medicare Advantage) covers:
- All benefits and services covered under Part A and Part B
- Usually also includes Medicare prescription drug coverage (Part D) as part of the plan
- Run by Medicare-approved private insurance companies that follow rules set by Medicare
- Plans have a yearly limit on your out-of-pocket costs for medical services
- May include extra benefits and services that aren’t covered by Original Medicare, sometimes for an extra cost
Medicare Part D (Medicare Prescription Drug Coverage):
- Covers the cost of prescription drugs
- Run by Medicare-approved drug plans that follow rules set by Medicare
- May lower your prescription drug costs and help protect against higher costs in the future
Short term medical insurance is flexible and fast. Some of the advantages of short term medical insurance is listed below:
- Apply anytime of year
- Option to choose the length of time you want coverage
- Cancel coverage without penalty
- Choose from a range of available deductible amounts
This insurance is designed to fill the bridge gaps in your health care coverage during times of transition. For example, a college student who is just out of school, or someone who is in transition of new job or someone without health insurance but have missed the Open Enrollment will suit the benefits of the short term medical insurance.
The premium of short term medical insurance is determined based on your age, residence, sex, tobacco, and medical history. Even though there are multiple benefits of short term insurance, it is always better to compare with other health insurance to find the plan that is just for you.
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