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Remember that most individual health insurance programs require evidence of insurability, in other words, you must be relatively healthy at inception in order to qualify for coverage. Rarely in today's market will a carrier ever offer you health coverage with "no questions asked". So, if you've come looking for coverage because of a significant medical event, expense or new exposure, you may want to send in a detailed request for information. Otherwise, read on and you will find a number of categories for a variety of health plan needs and circumstances.
- Comprehensive Major Medical
- Short Term or Temporary Medical Coverage
- International Major Medical
- Catastrophic Major Medical
- Qualified High-Deductible Health Plan
- Consumer Driven Health Plan
- Health Savings Account
Short Term or Temporary Medical Coverage - This coverage type is best utilized by generally healthy individuals or families that are for some reason between more permanent forms of coverage. Possibly they are in a probationary period in a new job, or have left full-time student status and have not yet entered the work-force where coverage may be provided, but anticipate doing so in the near future. This coverage almost always excludes coverage for any health condition that exists prior to the effective date of establishing this coverage. Additionally, this coverage most often has specific term limitations as to how long the coverage will be provided, and how many times it may be renewed. Portability of this coverage may be minimal or not available, so use this coverage with caution. It can be excellent for providing stop-gap coverage in the right circumstances, but is not a long term solution.
International Major Medical - Many United States health benefit plans provide very limited or no coverage when travelling abroad. Please review existing coverage as part of your trip planning when travelling abroad. You may need specific additional coverage to assist or assure transportation and/or medical coverage when travelling abroad, especially for a lengthy time.
Catastrophic Major Medical - This coverage is designed with VERY HIGH DEDUCTIBLES in order to eliminate paying for any normal or routine medical expenses. As denoted in the description, true "catastrophic" medical expenses are the target of this protection. Coverage frequently covers expenses AFTER the first $50,000 of medical expense in a contract period, and frequently provides relatively low benefit limits after that. While this coverage tends to be very inexpensive, clearly this is for a reason. The number of participants that have this level of expense after first qualifying for and receiving coverage is low. But of course, this type of coverage is far better than none at all, especially if you have assets to protect.
Qualified High-Deductible Health Plan - A qualified high deductible is one which meets the IRS requirements for plan design, minimum deductibles and maximum out of pocket requirements to enable the covered person to be eligible to establish and/or contribute to a Health Savings Account.
| Annual Contribution Levels for HSAs | |||
| Individual Amount | Family Amount | ||
| 2008 | Minimum Deductible Maximum Out-of-Pocket |
$1,100 $5,600 |
$2,200 $11,200 |
| 2009 | Minimum Deductible Maximum Out-of-Pocket |
$1,150 $5,800 |
$2,300 $11,600 |
Consumer Driven Health Plan - A consumer driven health plan (CDHP) is a plan with specific design features intended to encourage or provide incentive to the covered person to better participate in the health care purchasing process. Encouraging more cost effective settings, generic prescriptions, or better lifestyles are all examples of the goals of certain features of a CDHP.
Health Savings Account - A Health Savings Account (HSA) is one of the newest and best ways for many to set aside money for inevitable health care expenses. There are many advantages to HSAs. First, HSAs create tax-free money for un-reimbursed medical expenses. HSAs earn tax-deferred growth and excess funds can be invested to maximize earnings. HSAs are also excellent ways to create supplemental retirement income.
The federal government created HSAs to be used in conjunction with a QUALIFIED high deductible health plan. Not all high deductible plans are qualified - special rules have been created to define exactly what type of coverage allows someone to open an HSA. First, an individual may not have any other type of health coverage besides a qualified high deductible health plan to be eligible to open an HSA. Coverage such as dental, vision, disability, and accident insurance are permissible. The minimum deductible is indexed for inflation by the IRS each year. This amount for 2008 must be at least $1,100 for self-only coverage or $2,200 for family coverage. The out-of-pocket maximum cannot exceed $5,600 and $11,200, respectively. In addition preventive services, such as annual exams, routine visits, and well child care may be covered with simple co-pays, without meeting the deductible. All other expenses, including prescriptions, must be subject to the deductible before coverage begins.*
The premise of this type of arrangement is that it allows someone to purchase health coverage that protects them from the bad things in life but allows them to take care of the small things themselves. Those who use this type of a plan are more responsible for their routine healthcare costs and therefore make more cost effective decisions regarding their care. This, in addition to the increased cost sharing and reduction in administration costs, results in a substantial reduction in the premiums of these plans. Quite often, the budget for a qualified high deductible health plan used in conjunction with an HSA to cover the deductible is still less expensive than a comparable "traditional" plan without the deductible. This means that it makes sense for everyone to consider this strategy regardless of their age or health status.
The concept here is simple - use the same money in your healthcare budget to buy a reasonable amount of insurance for less money and put the difference in a specially treated fund that is there if you need it, and yours to keep if you don't use it! Let Client First look into your options in qualified high deductible health plans and Health Savings Accounts today. We have the knowledge and resources to determine and present your best options available.
*The preceding is meant to be a brief overview of the rules regarding what constitutes a Qualified High Deductible Health Plan by the IRS. Other rules apply.
For more information see www.clientfirstbank.com.