Insurance Information
What is Medicare?
Medicare is a federal health insurance program for individuals aged 65 and older, as certain younger people with disabilities receive Social Security disability benefits and people with People with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD).
Medicare can be quite complex to understand. It is divided into four parts.
Original Medicare – Includes Part A and B automatically upon applying to Medicare. The policyholder pays for services as they are needed. There is a yearly deductible, and patients pay approximately 20% of medical expenses as co-insurance. Part D for prescription drug coverage can be added as an option for an additional cost.
Part A – Provides inpatient/hospital coverage. Medicare charges a deductible of $1600 (2023) upon admission to a hospital for inpatient care. Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.
Part B – Doctor and outpatient services. Coverage for doctor visits, diagnostic screenings, doctor visits, ambulance transportation, and other services. This part involves more significant costs and a monthly premium set by the government at $164,90 (2023).
Medicare Advantage – A private and alternative version to Original Medicare.
Part C – Medicare Advantage. Includes bundled plans that encompass Part A, Part B, and Part D alongside other dental, vision, and hearing benefits. These plans have yearly contracts with Medicare and must follow federal rules. Each Medicare Advantage plan charges different out-of-pocket costs.
Part D – Prescription drug coverage for both generic and brand-name drugs. To get it, you must join a Medicare-approved plan that offers a formulary of drug coverage and tiers on out-of-pocket costs for different drug types. Premiums will depend on the type of plan and if it is bundled with Original Medicare or a Medicare Advantage plan.
What is the Medicaid Program?
Medicaid is a joint federal-state program aimed at providing health care coverage for low-income families and individuals. Approximately 60 million Americans receive Medicaid benefits annually, with 50% being children and 25% elderly or people with disabilities. Medicaid is administered by the state with federal funding, spending an annual average of $1,708 per child, $4,575 per adult, and between $10,000–$13,000 for the elderly and disabled.
Medicaid is a critical government social program to offer coverage to uninsured populations. The program can cover outpatient care, hospital admissions, long-term medical care, and various other medical services. Eligibility for Medicaid is determined based on the Federal Poverty Level (FPL). It considers factors such as income, household size, age, disability, and children. Medicaid is vital to providing coverage to millions of Americans, reducing the uninsured population from 16% to 9% over the eight years since the Affordable Care Act was signed. You can check your eligibility and apply through your state Medicaid agency or the Health Insurance Marketplace.
What is group insurance?
Group insurance are insurance plans explicitly created to cover large groups, most commonly employees of a company or members of an organization. The organization’s group plans are purchased and then offered to the employees or members who can accept or deny coverage. Group plans are generally designed to be more cost-effective and with lesser premiums for participants than individual health plans. Employees of a business can also benefit by paying lower payroll taxes and deduct annual contributions in calculating income taxes.
Group insurance allows businesses to help pay for the health care expenses of their employees. It is seen as an attractive benefit for workers in both private and public spheres. Like individual insurance plans, employees pay a monthly premium, which depends on how low they would like the deductible. Large organizations typically offer various tiers of group insurance plans. However, because the company bears part of the cost, group insurance premiums are lower and copays for medical services. The only downside is that group insurance is contingent on employment or membership in an organization. Check with your current or future employers to see if they offer group coverage that can be a fit for you!
Basics of the Affordable Care Act (Obamacare)
In 2010, the Affordable Care Act (ACA), also known as Obamacare, was signed into law by President Barack Obama. It reformed the healthcare system to lower costs and provides access to more Americans. Before 2010, 46.5 million uninsured Americans could not afford coverage and were denied coverage based on pre-existing conditions or were not eligible for an employee or government-subsidized insurance. Obamacare established a National Health Insurance Marketplace where individuals could compare insurance plans. All health insurance plans have to offer ten essential health benefits.
The ACA offered various protections to consumers of insurance plans, including eliminating the pre-existing conditions clause, not allowing insurance companies to drop or deny coverage, and preventing premium hikes without government approval. Obamacare also expanded coverage for Medicare, Medicaid, and young adults up to age 26, who could be placed on parental insurance plans. The ACA mandates everyone to enroll in health insurance coverage. Open enrollment on health care exchanges occurs from November 1 to January 15 annually in most states. If you miss the enrollment period, it is possible to qualify during the Special Enrollment Period (SEP) or apply for short-term insurance until the next window opens.
New trends in health insurance due to the COVID-19 pandemic
The COVID-19 pandemic drastically shifted the social, economic, and healthcare status quo in the United States. The closing of businesses and economic recession, leading to layoffs, resulted in millions of Americans losing their employer-sponsored coverage. However, loss of minimum essential coverage (MEC) qualified as an exception for the Special Enrollment Period, which saw enrollment up by 139% from 2019. This year and now that the pandemic is under control, hospitalizations are still on the increase, which has led many to reconsider their coverage plans options to aid with subsequent costs.
The pandemic and its devastating toll on the population has placed health coverage a priority for Americans, many of whom experienced a loss of someone they know. The impact of COVID-19 on individuals with underlying conditions such as cardiovascular diseases and diabetes has led people to reconsider their health. There is an expectation that the volume of healthcare utilization and insurance will increase in the next five years due to concerns for personal health and wellbeing. Elements such as preventive services may become increasingly popular, with insurance companies having to adapt plans to meet this demand. Telemedicine and video appointment have already become part of the norm. Finally, providers’ well-established networks and ecosystems may need reconsideration as the pandemic demonstrated that the current health system is not sustainable in terms of costs and population. A greater emphasis will have to be placed by insurance companies and healthcare stakeholders on interconnectivity, information sharing, and accessibility to decrease costs and provide efficient care.
What is short-term health insurance?
- waiting for ACA coverage to start
- transitioning to Medicare
- obtaining individual insurance after 26
- switching jobs or employer coverage.
Unlike ACA plans, short-term insurance does not guarantee coverage for pre-existing conditions or essential health benefits such as maternity and mental health. Plans vary widely among insurers and states on what they cover, so check your policy carefully. However, short-term insurance has several benefits, including the length of coverage ranging 1–12 months, the ability to drop coverage with no penalty, and generally lower premiums. Short-term insurance is generally the right choice for temporary situations and helps maintain coverage if healthcare needs arise.
What is disability insurance?
Disability insurance seeks to protect your most important asset – the ability to work. Disability insurance is a type of coverage that provides a portion of your monthly income if an injury or illness prevents you from working over an extended period. It is designed to provide an income for essential expenses in the unfortunate case something happens to you. More than 90% of claims filed for long-term disability are due to medical illness rather than physical injuries affecting some individuals as young as 20 years old. Policies define disability differently – some begin payouts if an injury or illness prevents employment at one’s primary job, regardless of supplementary income. Other insurers payout only in cases where you are unable to work at all.
Disability insurance is an agreement between insurance companies and policyholders so that any individual can acquire it, but some employers offer it as well. Like other insurance types, you pay a premium each month varying with age, gender, prior conditions, and occupation, which maintains your coverage. Typically, insurance covers 60–80% of earnings before the disability. The benefit period differs based on your policy, which can offer short-term and long-term coverage, lasting from several months to years. Disability insurance has various nuances which your insurance agent can explain to you when applying. These nuances can affect everyone; purchasing disability insurance is a smart investment into your future safety net.
Millennials and health insurance
Under current law, individuals can remain on their parents’ insurance plans until 26 years of age. Upon turning 26, you have 60 days to sign up for health insurance. Millennials make up a significant portion of the workforce so that employer-offered health insurance may be a viable option. Cost is the primary reason millennials choose not to get health insurance. However, even young and healthy individuals can get sick or have accidents. The most significant benefit is that health insurance is more affordable at this age.
Each person’s health needs are unique, but for healthy individuals with low-risk lifestyles – choosing a high-deductible plan can decrease premium costs. Most millennials use healthcare differently from older generations. These differences should be considered when selecting a healthcare plan. The current system allows you to shop around on the national healthcare exchange based on your budget, healthcare needs, and use of services, such as emergency care or prescriptions. Health insurance is essential to consider as you age, with cost differences between being covered and having no insurance becoming astronomical. The United States has the highest healthcare costs in the world, so it is essential to invest in your health and future.
Glossary
- Allowed amount/charges – specific amounts charged for items and services agreed upon between insurance companies and healthcare providers when included in the plan’s network.
- Billed amount/billed charges – the full amount charged for items and services by the provider. If the patient has no insurance, this represents the bill that must be paid. However, insurers will negotiate a discount with providers, with the insurance company’s statement reflecting the difference.
- Claim – a request for payment by the patient or provider submitted to the insurance company after receiving healthcare services. The insurance company reviews the claim and reimburses the patient or provider who filed it.
- Co-insurance – the percentage of healthcare or services costs that a patient pays after meeting the deductible limit when the insurance plan activates. After the deductible is met, the co-insurance is 20%, meaning you will pay $200 per every $1000 of medical services.
- Copayment – a flat fee outlined by an insurance policy that must be paid when receiving medical services. The amount can vary depending on services, such as $30 per doctor’s visit and $20 per medication prescription.
- Deductible – an annual amount that a person must spend on medical services before the insurance begins to cover costs under a plan, i.e., a $1000 deductible means that the insurance plan will not cover any service or medication until the patient spends $1000 out of pocket. Typically, plans with higher deductibles have lower premiums and vice versa.
- Family coverage – insurance coverage includes the primary policyholder (subscriber) and their spouse and any dependents, such as children.
- Formulary – is also known as drug list, prescription medications, both generic and brand-name approved by the insurance company and is covered by the insurance plan. Commonly, prescription medication is grouped into tiers, which determines the portion of the insurer’s cost.
- In- and out-of-network providers – also known as preferred/non-preferred providers. Health insurers or health plans maintain contracts with various providers. Policies may differ, with insurance only offering coverage for visits to providers within the network or offering a ‘tiered’ system, where the patient pays extra to see an out-of-network provider.
- Inpatient care – care and services administered when a person is admitted as a patient and treated in a healthcare facility such as a hospital, for emergency admissions, surgeries, labor, maternal care, etc.
- Medical necessity – a process when an insurance company determines if a service is medically necessary before offering coverage. While medical necessity based on clinical guidelines and appropriate methods to address a patient’s complaint is commonly approved, less essential aspects such as alternative therapies or plastic surgery may be denied despite having health benefits in some cases.
- Out-of-pocket costs and limits – any additional costs that a patient pays themselves when receiving health care, which is not covered by insurance. These include copayments and deductibles. However, insurers often establish a maximum limit to out-of-pocket costs, after which the insurer pays 100% of the charges. The limit never includes the premium or services not covered by the plan.
- Outpatient care – care provided to patients regularly, with the ability to return home after care without a prolonged stay at an inpatient facility, e.g., many health care services, such as a doctor’s visit.
- Premium – a monthly amount paid to the insurance company to upkeep membership on the insurance plan. Health insurance contracts that determine the monthly premium are renegotiated each year.
- Prior authorization/exception request – before a health insurance company covers some medical services, patients may need to seek approval using authorization forms. Similarly, an exception request is a written approval that the insurance covers a specific service or medication as advised by a healthcare provider before obtaining it.
