 Personal Finance PowerPoint Presentation. Private Health Insurance. Prepare to get financially fit by practicing personal finance. Remember that insurance is part of our long-term risk mitigation strategy where we use the adage of measure twice cut once. We're gonna put together a formal plan which would look something like setting up the goals, developing a plan to meet those goals, putting that plan into action and then reviewing the results and then we go through that process again and again periodically. We're now looking at private health insurance. 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. This is by Amy Fontiniere, updated May 18th, 2021. Remember that healthcare insurance is similar to other kinds of insurance but due to the complexity of the medical profession, the medical field and due to the laws that are imposed on it, it can be more complex in some ways as well. So we talked about the Affordable Care Act in prior presentations, which of course have an impact here. Note that if you were to compare it to other kinds of insurance that are going to be possibly more simple, at least in some regards, such as say property insurance. If you buy property insurance, you're basically safeguarding against some future event which possibly is not likely to happen but if were to happen would be financially devastating such as your home building burning down. Hopefully that doesn't happen but if it did, it would be a huge financial cost that we might not be able to cover therefore mitigating the risk with the property insurance. Same thing could happen with the medical insurance from like a classical insurance standpoint, you would be thinking I'm going to safeguard myself and against the event that I have an extreme medical condition such as a disease or something that would have a large financial impact, it would have other impacts as well but clearly I would need help with the medical bills possibly and therefore you would think the insurance would kind of kick in but we also have that other kind of component which is that the insurance is being expanded and there's pressure from a political standpoint to have insurance expanded to have the preventative care covered in it as well. So that would be similar to car insurance where you're going to be covering the tire rotation and the oil changes and stuff like that. So that adds of course the level of complexity when you're trying to compare and contrast different kinds of plans and what kind of plans that you would want. So just keeping that in mind, buying private health insurance. If your employer doesn't offer you health insurance as part of an employee benefit program, you may be looking to purchase your own health insurance through a private health insurance company. So the first place to go as we've looked at in prior presentations to find health insurance might be your employer because oftentimes and traditionally there's kind of this linkage between the health insurance and the employer for multiple different kind of reasons that we've talked a little bit about historically but at this point there's still kind of tax benefits that could be involved and you could have some kind of group coverage which could lower the premiums which means it's often beneficial if you can get access to the insurance through the employer. So that's usually the first place you look but if you can't then you're going to be buying your own health insurance. So a premium is the amount of money that an individual or business pays to an insurance company for coverage. So premium is the cost of the health insurance and return for what you're going to be getting coverage against the risk in the future and possibly for the preventative care help to pay for that. Health insurance premiums are typically paid monthly. Employers that offer an employer-sponsored health insurance plan typically cover part of the insurance premiums so it's part of it might be a benefit from the employer. They pay for some of it and or they might take some out of your withholdings either way it's usually beneficial because they're usually able to get possibly a cheaper plan due to the group coverage and or tax benefits which they can pass on to the employee most likely. So if you need to ensure yourself you'll be paying the full cost of the premium. So if you can't do that then you gotta buy your own insurance and you'll be paying the full cost. So it is common to be concerned about how much it will cost to purchase health insurance yourself. You think yeah that's a little concerning it's expensive. However, there are various options and prices available to you based on the level of coverage that you need. When purchasing your own insurance the process is more complicated than simply selecting a company plan and having the premium payout come right straight out of your paycheck every month. So once you get set up on an employee plan it's pretty straightforward because they just take the money out of your pay before you even see it and the whole thing is set up fairly smoothly once it's done. So here are some tips to help guide you through the process of purchasing your own health insurance. How buying private health insurance works. Some Americans get insurance by enrolling in a group health insurance plan plan through their employers. Medicare provides healthcare coverage to seniors and the disabled and Medicaid has covered for low income Americans. So you got the Medicare and Medicaid options depending on whether that be applicable to you. Medicare is a federal health insurance program for people who are age 65 or older. Certain young people with disabilities and people with end stage renal disease may also qualify for Medicare. So Medicaid is a public assistance healthcare program for low income Americans regardless of their age. So if your company does not offer an employer sponsored plan and if you are not eligible for Medicare or Medicaid so and those are kind of obviously specialized kind of government components if you would be able to get them. So if you don't have the Medicare, Medicaid and you're not covered by your employer individuals and families have the option of purchasing insurance policies directly from private insurance companies and through the health insurance marketplace. Private insurance companies, health insurance marketplace which we talked about a bit with the Affordable Care Act in prior presentations. So seniors when you might need private health insurance, there are certain circumstances that make it more likely that you will need to purchase your own health insurance including a young adult 26 years of age or older. So under previous, under provisions of the Affordable Care Act, the ACA we talked about in prior presentations of 2010 young people can be covered as dependents by their parents health insurance policy until they turn 26 years old. After that, they must seek out their own insurance policy. So at that point in time, you might see a bigger group of people that are saying I need to do some other kind of option at that point in time. Unemployed, if you lose your job you may be eligible to maintain coverage through your employer's health insurance plan for a period of time through a program called the Consolidated Omnibus Budget Reconciliation Act otherwise more commonly known I think by most people as COBRA. So in other words, if you lose your job you're saying oh no because my health insurance is tied to the job and so what am I gonna do now? Well, you could do the COBRA which would keep you extended on the coverage at least for the time being to help assist you possibly with the transition. So COBRA allows eligible employees and their dependents the option to continue health insurance coverage at their own expense. While coverage through COBRA can be maintained for up to 36 months under certain circumstances the cost of enrolling in COBRA is very high. So that's kind of helps you so you don't kind of lose the insurance at that point but it's still expensive to do that. So this is because the formerly employed person pays the entire cost of the insurance. Typically employers pay a portion of health care premiums on behalf of their employees. So you no longer have the employer giving you the kind of the benefit because you're not working there anymore so they didn't really yank the insurance policy out from under you. But you still, now you don't have the employer kind of portion being paid therefore it could get expenses. So a part-time employee, part-time jobs rarely offer health benefits. So if you're working part-time then which a lot more people kind of do these days they were possibly multiple part-time jobs or possibly have gig work and a couple carp done jobs or something like that. Well then you might not have the health benefits insurance that would be through the employer. So a part-time job is any position that requires employees to work a lower number of hours than would be considered full-time by their employer or 40 hours per week. So if you work part-time you usually must enroll in your own health insurance. Self-employed, a self-employed person may work as a freelancer or on or own a business. So if you're self-employed like your sole proprietor scheduled to be entrepreneur for example then obviously you don't have an employer or you're not gonna be able to get your insurance through them. So you might have to have some other options. So some self-employed people can get health insurance through a spouse's plan. So if you're self-employed, you have a Schedule C business then and your spouse then is working for a company then whoever's working for the company probably has the best option possibly to the health insurance benefits and you might want to be going through them to do the health insurance. Although there are pros and cons to having your own insurance from a tax standpoint for a self-employed individual you wanna kind of weigh the pros and cons. If not, they must provide their own health insurance. A business owner who has employees. So notice if you're self-employed and you're sole proprietor you don't have any employees then clearly you'd be looking for how you're gonna cover yourself and or your family possibly look into a spouse if it's available there. If not, then maybe you're trying to find another way to cover yourself. So if you start a business and you have employees you might be required to offer them health insurance. Even if it's not required you might decide to offer health insurance to be competitive employer that can attract qualified job candidates. So if you have employees health insurances could be a big benefit to the employees and could be drawing in more people if you're able to provide it. So in this situation you'll be required to purchase a business health insurance plan also known as a group plan. So the group plan being a group plan is one of the kind of benefits that you might be able to get and the group plan could be lower on the rates because the group plans we talked about in the past could be cheaper in some ways cause they know who's gonna be insured and so on and then that could be a benefit to you and the employees possibly. So if you retire or your spouse parent retires so when you retire you will likely no longer be eligible for the employer sponsored health insurance. So you've retired and you had your insurance through work well they're not gonna keep covering you because you're not working there anymore. So that's a point in time where you're gonna have to say okay what am I gonna do now. So if you're under age 65 and not disabled you will need to purchase individual private health insurance until you turn 65 and apply for a Medicare. So if you're at 65 you might be able to get the Medicare but if you're not there then you need some other kind of insurance you would think. Many retirees choose to purchase private Medigap or Medicare Advantage plans in addition to the Medicare as a way of guaranteeing more comprehensive coverage. Some retired people may also decide to completely replace Medicare coverage with a private Medicare Advantage plan. It is important to note that Medicare Medigap and Medicare Advantage plans are only for the individual or spouse, partner or any dependents cannot be insured through your Medicare plan. So in other words usually when you're looking for medical insurance you're thinking first option might be through the employer and if I go through the employer and they give me coverage then maybe I can cover the rest of the people that are there but if you're covered by Medicare or these other items Medicare, Medigap, Medicare just because your coverage doesn't mean that the people in your household will be covered. So once again, it is important to note that the Medicare, Medigap and Medicare Advantage plans are only for the individual, your spouse, partner and any dependents cannot be insured through your Medicare plan. So this means that if your family was previously insured through your employer's plan and you retire your family members may need to enroll in individual insurance plans. So now you're saying the family was all hooked up on the insurance plan through my private, my employer, I retired, I'm covered because I'm over 65 possibly with one of these other kind of components but now they're on their own and they're gonna have to figure something out. So dropped by your existing insurer although the ACA prevents insurers from canceling your coverage or denying you coverage due to a pre-existing condition or because you made a mistake on your application there are other circumstances when your coverage may be canceled. So it's also possible that your insurance may become so expensive that you can't afford it. So that would be not a good situation. Why you should purchase health insurance. So if you find yourself in one of the above situations and lack health insurance coverage it's important to enroll in an individual plan as soon as possible. So clearly, if you're not getting the insurance through work and you're not getting it elsewhere you might be saying, eh, I don't need the health insurance but as we've seen with other just normal insurance you would think that you would at least want the insurance if you could get it to be covering you against the catastrophe that could happen because a health condition could be a financial, a huge financial thing just like your home burning down or something like that. So you would think that at least it would be good to be covered in that event. So the find for failing to obtain coverage was canceled in 2019. So you might say, well, am I required under federal law to get covered? No, because it was, they were trying to do that but then they basically canceled that although you could have some requirements under the state that you are in depending on the state you're in. So even though you're not required to have insurance you cannot predict when an accident will occur that will require medical attention. So in my opinion, it'd be better insurance is usually a good thing. It would be far better for people to choose to get the insurance as opposed to be forcing them to get insurance because when the law forces someone to get insurance it makes people stupid, right? So what you wanna do is say, no, I'm not required to get insurance but I think it's a reasonable thing would be my kind of rationale on it because it would be safeguarding me against a catastrophe that could happen and or then I wanna also take into consideration the other benefits that could be there for the preventative care. So even a minor broken bone I can have major financial consequences. So clearly health care is expensive. If I have a problem I would like to, I'd like to deal with the pain of the problem and not of the medical costs worrying me too much. So if you purchase insurance through the health insurance marketplace you may be eligible for income based premium tax credits or cost sharing reductions. So we talked about the marketplace and before that's the Affordable Care Act type stuff. So if you're in the lower income individual area then you can get benefits to get coverage through the marketplace possibly. The marketplace is a platform that offers insurance plans to individuals, families and small businesses. The ACA, the Affordable Care Act established the marketplace as a means to achieve maximum compliance with the mandate that all Americans be enrolled in health insurance. This was a federal mandate which once again we said that they stopped but the marketplace is still there. It just doesn't have that same kind of mandate to try to force everybody in the country to be having health insurance from the federal level. So many states offer their own marketplace while the federal government manages and exchange open to residents of other states. While you may not be able to afford the same kind of plan that an employer would offer you any amount of coverage is more advantageous than none and the event of a major accident or a long-term illness you will be prepared. So that's the main thing you wanna get covered. All this other preventative stuff, good. You'd like that, that would be great. But just from a normal insurance standpoint in the event that you come down with a disease that would be financially catastrophe then you would like to be, that's the main coverage that you would think you would, the minimum want that. She's in the best insurance plan for you. There are several different kinds of health insurance plans and each of these plans has a number of unique features. Health maintenance organization, those are the HMO. A health maintenance organization, HMO is a company with an organizational structure that allows them to provide insurance coverage for their subscribers through a specific network of healthcare providers. So that's the one where you kinda got a more specific network of providers trying to manage a little bit more strictly where you're going, how you're going, when you're going and who's telling you who to go, when to go, how to go. So typically the HMO features include paying for insurance coverage for a monthly or annual fee. Premiums tend to be lower for HMOs because health providers have patients directed at them but the disadvantage is that subscribers are limited to accessing a network of doctors and other healthcare providers who are contracted with the HMO. So clearly there's pros and cons, you're a little bit more restricted with the HMO but that restriction allows you to possibly get the lower premiums in that way. Then we've got the preferred provider organization, that's the PPO in contrast, a preferred provider organization, the PPO, is a type of insurance plan in which medical professionals and facilities provide services to subscribed clients at reduced rates. So healthcare providers that are part of this network are called preferred providers or in-network providers. Subscribers of a PPO plan have the option of seeking healthcare providers outside of this network of providers. So now they can have a little bit more flexibility there out of the network providers but the rates foreseen of these providers are more expensive. So if you go outside the range, prices could go up. So exclusive provider organization, those are the EPO, an exclusive provider organization, an EPO is a hybrid of HMO and PPO plans. With an EPO plan, you can only receive services from providers within a certain network. However, exceptions can be made for emergency care. Another characteristic of an EPO plan is that you may be required to choose a primary care physician, that's the PCP. This is a general practitioner who will provide preventative care and treat you for minor illness. So that's kind of like your point one place to go typically the first stop. So in addition with an EMO plan, you usually do not need to get a referral from your PCP to see a specialist physician. So that's interesting. So in addition with an EMO plan, you usually do not need to get a referral from the PCP primary care physician to see a specialist. Okay, so that we got the high deductible health plan, that's the HDHP. We talked about that in a bit more detail in prior presentations. A high deductible health plan, the HDHP has a couple of key characteristics. As its name implies, it has a higher annual deductible than other insurance plans. So a deductible is the portion of the insurance claim that the subscriber covers themselves. The HDHPs typically have lower monthly premiums. So this would be the normal trade off and you can kind of compare this to the normal insurance, like property insurance. Your insurance again, your house burning down the big catastrophe that could happen. If you're getting a high deductible plan, it's likely that you're trying to just get a cheap plan because you can't afford the plan and or you might be a younger individual possibly and you're trying to get more kind of traditional type of insurance. And so you're basically saying, I'm gonna buy the insurance that is gonna be cheaper for the premiums, but they have a higher deductible in the event that a problem happens. That means I'm gonna have to pay the deductible before the insurance kicks in, but you might be able to basically self-insure for the deductible, meaning it'd be similar to my house burning down. I can afford some, I have money to afford up to a certain degree, of a financial tragedy, but I can't afford over that amount. I'm gonna have something kick in and that would be the similar situation with the medical situation. I could afford to cover up to a certain amount, but past that amount, the medical bills can get completely out of control. And of course you would like then the insurance to kick in. So you got the lower premiums, but you've got the higher deductible in the event that something happens. So this type of plan is ideal for young or generally healthy people who don't expect to demand healthcare services unless they experience medical emergency or unexpected accident. So that means obviously you might be paying more out of pocket for the preventative stuff, but you might not be doing as many doctor visits if you're healthy and young, for example, and therefore it could be more beneficial. If you're doing a lot of doctor visits, you would think that you would want the insurance company to help you out with the doctor visits and it might be worth the higher premiums to do that. So the last defining feature of high deductible health plans is that it offers access to tax advantage health insurance savings accounts. So this is kind of interesting because you would think that they first, they want to have to hire deductible plans available to people. So, and that just makes sense from a market standpoint, but it also makes sense from an affordability standpoint when they're trying, when you can see from the government's trying to say, I'm trying to make it more affordable for most people to get access to health insurance. So you've got, but then they also want to try to make it so you could still have access to the preventative care, which they're trying to drive everyone to. So that means if you've got the high deductible plans, then you might also, that would be more likely lower-income individuals or people that just don't think they're gonna need, the higher plans are possibly gonna self-insure to some degree. You might have tax benefits as well, which is an incentive to try to still get people to do the preventative stuff. So that's gonna be the taxes. So they could have the tax advantage health savings accounts. Now these get a little bit confusing to try to manage to make sure to try to get your tax benefits from them. But if done right, then you can use these as a tax benefit. So the HSA subscribers can contribute funds that can later be used for medical costs that their HD HP doesn't cover. So that means a lot of the preventative costs that might not be covered, you might be able to do with the HSA and you could possibly a tax benefit for doing it that way. So the advantage of these accounts is that the funds are not subject to federal income taxes at the time of the deposit, which is great. So you get a tax benefit on consumer-driven health plan, that's the CHDP, consumer-driven health plans, the CDHPs, pardon me, are a type of HDHP, high deductible health plan. A portion of services that subscribers receive is paid for with pre-tax dollars. Like other HDHPs, high deductibles, the CDHPs have higher annual deductibles than other health insurance plans, but the subscriber pays lower premiums each month. Point of Service POS plan. So a point of service POS plan provides different benefits to subscribers based on whether or not they use preferred providers in network providers or providers outside of the preferred network out of network providers. A POS plan includes features of both HMO and the PPO plan. So we got that hybrid kind of thing happening.