 Personal Finance PowerPoint Presentation. Private health insurance, part number two. Prepare to get financially fit by practicing personal finance. Remember that insurance is part of our longer term risk of mitigation strategy where we follow the adage of measure twice, cut once, putting a more formal plan in place, which might look something like this. We're gonna set the goals. We're gonna develop the plan to reach the goals, putting the plan in action, then review the results. We'll continue that process periodically. We're gonna continue talking about the private health insurance here. Most of this information can be found at Investopedia Buying Private Health Insurance, which you can find online. Take a look at the references, resources. Continue your research from there by Amy Fontenier, updated May 18th, 2021. In prior presentations, we started talking about buying private health insurance and now we will be continuing taking a look at this short-term insurance policy. A short-term insurance policy covers any gap that you might experience in coverage. If, for example, you change jobs and your new company plan doesn't kick in immediately. So if you got that short-term gap, then that's gonna cause a problem. We wanna make sure that we have the continuing coverage in the event that a medical problem happens during that timeframe. So it typically lasts for three months. The term links vary by state. And in some U.S. states, you may be eligible for a short-term plan for up to 12 months. Short-term health insurance is also called temporary health insurance or term health insurance. It can be useful if you're changing jobs, waiting to become eligible for Medicare coverage or waiting out the designated open enrollment period for a plan. Those are typical times when you might have that gap that you would need to be covering with the short-term insurance policy. Under a short-term insurance plan, your spouse and other eligible dependents may also be covered. However, one important caveat of a short-term insurance plan is that in some cases, pre-existing conditions can disqualify you from the coverage. So we have the different kind of questions, of course, short-term plan. Can other people be covered if I'm looking for that short-term coverage policy and then also that pre-existing conditions can be more of an issue possibly with the short-term plans, pre-existing conditions, typically being bad from the insurer's perspective and therefore could have an impact, of course, on the ability to qualify. For the definition of a pre-existing condition varies depending on the state where you live, but it is usually defined as something you have been diagnosed with or received treatment for within the last two to five years. Catastrophic coverage. Catastrophic coverage health insurance is a type of insurance plan that is typically only available to adults ages 30 or younger. To qualify, you must receive a hardship exemption from the government. Catastrophic health insurance typically has lower premiums than other health insurance plans. These types of plans are intended for people who cannot afford to spend much money every month on insurance premiums but don't want to be without insurance in the event of a serious accident or illness. So once again, we're kind of looking at the traditional kind of insurance in this case where we're trying to be covered in the event that a big financial impacting event happens such as similar to when you're looking at property insurance on a home or something like that, a fire happening on the home. We were looking here at a big medical kind of condition that could happen that could have financial consequences that we would want to be covered for. So while catastrophic health insurance plans may have low monthly premiums, they typically have the highest possible deductibles. So clearly what we're seeing then is if some event then happens, then you're gonna have to pay the deductible and you're covered over and above the deductible amount. So choosing a deductible, once you've decided on the type of plan that is best for you, you'll need to determine how much you can afford to pay as a deductible. So when you're choosing the plans, there's typically gonna be the interplay between the deductible, meaning how much you might have to pay for certain conditions that could happen before the insurance kicks in and the cost of the plan, which would be the premium for the plan. This is the predetermined amount that you pay for coverage healthcare services before your insurance plan starts to pay. What you can afford to pay in out-of-pocket medical expenses each year. So the other cost that we need to consider is what am I, because the other component is gonna be the preventative care typical kind of things, the out-of-pocket costs that happen. If we don't have a lot of out-of-pocket costs, then we might come to different conclusions with the type of coverage we need. Then if we do have a lot of out-of-pocket costs that we have on a year-to-year kind of basis on the preventative stuff. So from my perspective, we would clearly want to be covered for the big catastrophe that happened, and then it would be dependent upon, how much of the out-of-pocket costs we have to see how much we would want to be covered for the preventative stuff. That's one way that you might kind of go about looking at it. So with both health insurance plans, the higher your deductible is, the lower your monthly premium will be. That's clear relationship that you would expect. So if your monthly cash flow is low, you might have to opt for the higher deductible. Another key consideration when selecting an insurance plan is the plan's out-of-pocket maximum, the maximum that you'd have to pay basically out-of-pocket. After you've spent this amount on deductibles and medical services through copayments and coinsurance, your health plan will pay the entire cost of coverage benefits. So in a catastrophe type of situation, it would be nice if you could say, I have an emergency fund that I'm self-insuring, at least possibly to the component, if possible, to the maximum out-of-pocket expenditures so that if that happens, then I can pay for that amount and hopefully the insurance would do like normal insurance would have you would normally think of insurance possibly kicking in over that amount. So how much does private health insurance cost? While many people are scared by the prospect of purchasing their own insurance versus enrolling in an employer-sponsored plan, some studies have shown that it can end up being more affordable than employer-sponsored plans. A study from the Kaiser Family Foundation found that the average monthly premium for an employer-sponsored insurance plan for individual coverage in 2019 was $603. It was $1,725 for family coverage. So conversely, also according to the Kaiser Family Foundation, if you were to purchase your own insurance outside of an employer-sponsored plan, the average cost of individual health insurance was $440 for families, the average monthly premium was $1,168.10. So there's kind of interesting impacts that are happening because remember traditionally it was that the health insurance was often a benefit from the employer and you've got the two components that you would think would be lowering the cost to the employers and that would be the fact that you got the group coverage and possibly tax incentives for the employers. But now on the individual side, you've got these other kind of laws that are coming into play like the Affordable Care Act and stuff that are kind of distorting the calculus on these things for, so I'm not saying it's good or bad, I'm just saying that that's how the field is changing, right? The field is changing, there's got a dancing landscape here, so you've got to follow it along. So in addition, if you end up purchasing coverage through the health insurance marketplace, you may qualify for a cost sharing reduction subsidy and advanced premium tax credits. So now you've got these tax kind of components which are typically applicable more to the low income individuals, that's what the health insurance marketplace kind of ties into the Affordable Care Act, which we dived into in more detail in prior presentations. So these can lower your premium payments amounts, your deductible and any co-payments and coinsurance for which you are responsible. We've got the Medicare.gov, you can check that out online. So if you are or are soon to be retired, you can begin on the Medicare website. So you're gonna wanna go to Medicare at that point in time and take a look at your options at that point, it would be clearly advisable to do. It is recommended that you see what the standard Medicare plan covers and then look at options for ways to supplement Medicare through Medigap and Medicare Advantage policies. So you're gonna say, if I qualify for Medicare, then what do they cover and do I need anything over and beyond or supplemental to the Medicare, which could include things like the Medigap and the Medicare Advantage policies. So when considering Medigap or Medicare Advantage coverage, it's important to understand how both work, how both work, types of coverage work in conjunction with standard Medicare coverage. So we got the healthcare.gov, another place you can go to continue your research. As a result of the ACA, the Affordable Care Act, the Health Insurance Marketplace was created in 2014. You can visit the Health Insurance Marketplace website to find out more about the options for health insurance coverage that are available where you live. So that's gonna be the marketplace that was kind of set up during this process of the Affordable Care Act. It might, you could check it out from state to state. You could have the state areas for it and typically it would kick in more, possibly have more advantages if you're on the lower income side of things possibly. So it's another option to look into to start your research. So you can also determine if you qualify for any subsidy and apply for it. So subsidies through the program for lower income individuals which could take into consideration the tax component possibly giving an advanced tax credit as part of the process. This could be great, it could lower the costs but it's also kind of complex because it's a free payment and it lowers the premiums and then you gotta deal with it on your tax return. So you wanna do some research to see if you can wrap your head around what is actually happening with it. So the marketplace has a specific open enrollment period. Typically it is from November 1st to December 15th every year although various events may lead to the open enrollment period being extended or reopened. The website includes information about private plans that are available for purchase outside of the marketplace. However, if you purchase a plan outside of the marketplace whether during open enrollment or not, then you will not be eligible for any subsidies available under the ACA Affordable Care Act because those are kind of tied to that marketplace. So when you're here in the marketplace then you're thinking kind of affordable care act and those kind of other components that might be applicable most likely if your income is below a certain threshold. So under certain circumstances an individual may be eligible to purchase a healthcare plan through the exchange even if it is outside the specified open enrollment period. This is called a special enrollment period. You may be eligible for a special enrollment period if you experience a household change including getting married or divorced, having and adopting a child, a death in your family, moving, losing your health insurance, being in a national catastrophe or experiencing a disability. Private health insurance companies. You can visit the website of major health insurance companies in your geographic region and browse available options based on the type of coverage that you pervert and the deductible that you can afford to pay. So the good thing about the internet these days is you can kind of compare different insurance companies as well and you can look at the reviews and so on. You can do side by side reviews with some of the tools that are available online which is clearly worth doing. The types of plans available and the premiums will vary based on the region where you live and your age. So obviously those are important components when you're thinking about health insurance because from the health insurance side of things they're gonna try to decide how much it's gonna cost them and that's how they're gonna try to set your prices. So the more risk factors there are involved which would include age and kind of where you live and stuff then you would think that would impact the cost that they're predicting and therefore the premiums. So it's important to note that the plan price quoted on the website is the lowest available price for that plan and assumes that you are in excellent health. So when they're advertising these are companies they're gonna advertise the lowest price. So if you're not in perfect condition if you have any other factors involved that's gonna increase the price. So they're gonna be advertising they're gonna put their best foot forward as they say looking as good as they can and then they're gonna kick you with that foot if you have any other factors that are there. So you won't know what you'll really pay for a month until you apply and provide the insurance company with your medical history. So pricing and the type of coverage can vary significantly based on the health insurance company. Because of this it can be difficult to truly compare the plans to determine which company has the best combination of rates and coverage. So in other words because there's so many varying factors it's kind of hard to just do a side by side from one company to the other. So the online tools and stuff it can be helpful to try to do those kind of comparisons. It can be a good idea to identify which plans offer the most of the features that you require and within your price range then to re-consumer reviews. So you want it you're gonna have to narrow it down to some degree and get a general idea of the general plans that you're looking at and then you might be able to go from company to company and compare those general things that you're looking for from company to company. So if you don't do that and you just kind of dive into it you're just gonna be overwhelmed with a lot of different options. So if you are choosing a family plan or are an employer who is choosing a plan that you'll provide to your employees then you'll also want to consider the needs of others who will be covered under the plan. So key factors for choosing plan, health insurance plans offer a variety of different features. Well it may be hard to find a plan that offers everything you desire consider which of the following features are the most medically and financially necessary. So here are some questions to consider when you are researching plan. So we got, does the plan offer prescription drug coverage? Cause I like the drugs I want my drugs. Does it only cover a generic versions of the prescription drugs? So sometimes you might be saying I don't think those generic versions are as good as the other versions, but oftentimes they're only gonna offer those because they're cheaper. So what is the copayment also referred as the copay on generics and name brand drugs? So check the medications you're already taking if any. So if you're taking the medications at this point, see if they're covered, see if they're brand name, see if there's a generic component and so on. So what is the office visit copayment and does the plan have instituted a maximum number of office visits that it will cover per year? So that will kind of depend on how important that is to you as to whether or how often you're using the doctor visits and how healthy you are and so on. And clearly the more doctor visits that you're doing per year, the more important it's going to be that you buy a plan which would probably be more expensive that's gonna pay for more of those doctor visits and they might put a cap on how many visits you can have a year. So you wanna take that into consideration. So what is the copayment for specialized services such as x-rays, lab tests and surgery? How about an emergency room visit? Do you want a plan that allows you to add vision and dental coverage? Do you need pregnancy benefits? Do you already have a doctor you would like? If so, you might want to find a plan that includes your doctor in its insurance company provider network. So in other words, when we talked about the different types of plans we said that they have these networks and if you already have a doctor, then it could be a little bit difficult to put that doctor into your network. And so you might wanna tailor your plan to take that into consideration. Do lifetime and annual maximum benefits apply? The ACA Affordable Care Act effectively eliminated lifetime and annual maximums for essential medical services, but this does not include dental and vision coverage for example, does the plan offer free or discounted services for preventative care such as an annual checkup? Most plans under the ACA Affordable Care Act provide free coverage for most preventative care services, short-term insurance plans and catastrophic coverage may not. Does the plan cover specialty services such as physical therapy, chiropractic and acupuncture visits? What hospitals are included in the network? For PPO's, what is the cost for out-of-network services? So if you get the PPO, it might be a more flexible thing but you might have to pay for those out-of-networks. What's the cost there? Should you want or need them? Can you afford this? So when can I buy private health insurance? Most types of health insurance have an open enrollment period during which you can sign up for private health insurance. This is true whether you buy insurance via the Affordable Care Act, the ACA Health Insurance Exchange in your state sign up directly through the insurer and roll in the plan that your employer offers or sign up for Medicare. So there's gonna be certain kind of windows that you gotta make sure that you're gonna be putting in place to be signing up. So certain life events can trigger a special enrollment period. So you might say, well, what if I don't line up to that enrollment period? I don't wanna be in a situation with where I'm outside or don't have coverage for a certain timeframe. So you could have situations where you have life events that can trigger a special enrollment period which will allow you to change your health insurance coverage outside of the normal enrollment period. These events include getting married or divorced, having a baby, losing your job based on health insurance or moving out of your health plans, service area. What does private health insurance cost? In 2020, the average national cost for health insurance was 456. This, of course, are averages. So there could be outliers. So take that into consideration for an individual in 1,152 for a family per month. However, this cost can vary considerably depending on your healthcare needs. So remember, those are just averages and they could be influenced anytime you have an average if there's these outliers that could be involved that could kind of skew the averages. So take it with a grain of salt. So the state, so however, these costs can vary considerably depending on your healthcare needs, the state where you live and what level of coverage you require. Where can I buy private health insurance? A good place to start looking for coverage is the health insurance marketplace created in 2014 by the ACA Affordable Care Act. So that's a good place to start kind of comparing things out. Remember, that might be more applicable if your healthcare is below a certain threshold. You might be able to get benefits through the health insurance marketplace, but just be aware of how those kind of benefits work. And again, there's kind of tax consequences that are involved with it as well that you wanna have an idea about. So you wrap your mind around what's gonna happen, how it's tied to your taxes and things. So on the marketplace for your state, you can look through the details of private health insurance plans and compare the cost and benefits of each. So that might be a place that they can kind of centralize or house certain things. You wanna do it in your state because you might have different kind of options from a state to state, a level with regards to the Affordable Care Act. So if your state does not have its own marketplace, so some states are gonna have its own marketplace, that's why you first kind of wanna go to the state to see if that would be the case. Then if not, then the next point you would think would be to go to healthcare.gov. So when you're thinking about the health insurance marketplace, if you're starting your research there, then you're thinking, can I go to the state which might have its own marketplace and start my research there, do some comparisons. In that sense, if they do not, then possibly the healthcare.gov. So the bottom line, getting your own health insurance policy is not as easy as signing up for an employer's plan, but at least you have control over the plan that you get. Once you figure out what you need and become familiar with the terminology used to describe health insurance plans, your research will become easier. With the number of options available, you can probably find a plan that meets both your needs and your budget.