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Understanding Your Health Plan Choices

January 1, 2010

Selecting your own health insurance is a difficult and confusing task.  Millions of small business owners, self-employed persons and uninsured individuals dread this necessary job.  There are more choices available now than ever before, but understanding the basic features of these many offerings can be very difficult.  Searching for information is equally difficult.  Many health plans are now offered only on the Internet, while others are offered only through local community health care offices.  Selecting the proper type of health plan for your situation is more important than choosing the specific insurance company or specific plan.  The prices and coverage vary sharply, depending on your individual situation and need.  Following are overviews of the twelve most popular types of health plans in the United States.  Keep in mind that not all types of health plans are available in all states.

Short Term Medical Insurance

1)   Short Term Medical Insurance is a low cost plan that expires after 6 or 12 months and then you must reapply for new coverage.  You may keep this coverage for as long as you wish, as long as you re-qualify every six months.  The quality of the coverage is excellent and the satisfaction rates are higher than for any other type of plan.  These plans offer full freedom of choice to use any doctor or hospital.  The premium rates are lower than other types of medical insurance.  These plans do not cover pre-existing conditions and you may not enroll in the middle of a course of treatment for a significant health issue.  These plans have always been popular with young people and those in-between jobs. Now these are a popular alternative for self-employed individuals.  Most of these plans are issued on the Internet with a very easy application form.  Approval of the application is granted instantly.  No medical history or interview is required.  ID cards are mailed within one business day.  These plans offer a 10 day money-back guarantee of satisfaction.

Intermediate Term Medical Insurance

2)   Intermediate Term Policies provide coverage for periods of up to 36 months.  This is a good option for self-employed individuals who are likely to change insurance plans every couple of years due to price changes or change in personal needs.  These plans offer full freedom of choice to use any doctor or hospital. These plans do not cover pre-existing conditions and you should not enroll in the middle of a course of treatment for a significant health issue.  Most plans are issued on the Internet with a very short application form.  Approval of the application is granted instantly.  No medical history or interview is required.  These plans offer a 30-day money-back guarantee of satisfaction.

Student Health Plans

3)   Student Health Plans offer low-priced coverage and despite the name the coverage is not necessarily limited to students.  Once the policy is issued to a student, you may continue on this insurance plan long after graduation until age 63.  These plans cover pre-existing medical conditions after an initial 12-month waiting period but they do not cover most prescription drugs.  Unlike most school-based health plans, the coverage is nationwide with any doctor or hospital of your choice.  These plans are often an exceptional value to graduate students and non-traditional older students.

Permanent Renewable Individual Medical Insurance

4)   Permanent Renewable Individual Medical Insurance policies provide continuous worldwide protection to age 65 but qualifying for these plans can be difficult.  Typically medical interviews are required and the application approval process takes a month or longer.  Insurers give discounts to healthy individuals who have completely clear health histories.  These plans do cover pre-existing medical conditions but, in reality, if you have any significant pre-existing conditions then you may not be accepted into the plan at the preferred rates.  Coverage limits are high, typically 5 to 10 million dollars.  Most of these plans today utilize an optional Preferred Provider Organization (PPO) to handle routine claim processing.

Managed Care and HMOs

5)   Managed Care Plans or HMOs provide full coverage for pre-existing medical conditions but may limit access to medical care through primary physician gatekeepers or participating provider networks. The primary concern is that the individual member and physician give up the right to determine the covered course of medical treatment. HMOs and managed care plans provide strongest preventative care benefits like reimbursement for gym memberhips.

International Health Insurance

6)   International Health Plans are for people traveling or residing outside of their country of citizenship or permanent residence.  Coverage can be for as little as 15 days or as long as many years.  These plans specialize in handling foreign language and foreign currency translations necessary to settle international health care transactions.  These plans provide limited coverage for pre-existing conditions.  Most plans are issued on the Internet with a very short application form.  Approval of the application is granted instantly online.

Medical Savings Accounts and Health Savings Accounts

7)   Medical Savings Accounts and Health Savings Accounts are bank accounts or investment accounts that can be used to make tax-deductible deposits and then pay out-of-pocket medical expenses.  These must be combined with a specific type of medical insurance in order to meet IRS qualifications.  Availability is limited to self-employed individuals and small businesses and annual contributions are limited by law to a few thousand dollars.

Medical Expense Reimbursement Plans

8)   Medical Expense Reimbursement Plans are tax-deductible plans used by businesses to provide tax-free health care benefits to employees.  These are especially useful for those with non-traditional or alternative medicine expenses that are not picked up by any other health plan.  With proper planning and setup, self-employed individuals can also use these plans with significant tax savings.

COBRA Plans

9)   COBRA Plans are a continuation of group insurance after you are no longer with the sponsoring employer.  They have the same features and benefits as group insurance plans but usually at a very high price.  These plans can usually be used for up to 18 months.  Some insurers offer a guaranteed conversion to a regular individual insurance plan if you can afford the premium expense.

State Mandate Plans

10)  State Mandate Plans also known as high risk insurance pools, are sanctioned by federal law known as HIPPA and made available to everyone who does not have access to other types of medical insurance; these plans are typically very expensive.  In some states these are administered by state government agencies rather than commercial insurance companies.

Group Medical Insurance

11)  Group Medical Insurance plans are guaranteed-issue to businesses with one or more employees on a bona-fide payroll (as evidenced by state payroll tax returns).  Premium rates may be based on industry, location and size of the business.  Most of these plans today utilize an optional Preferred Provider Organization (PPO) to handle routine claim processing.  There is a common misconception promoted by illegal or disreputable insurance marketers that individuals and self-employed persons can bypass state insurance laws and qualify for "1 person group" insurance.  In most cases, the plans that promote this tactic are eventually closed by state insurance regulators, but often not before many people have suffered losses not covered by their phony insurance plan.

PPO Discount Plans

12)  PPO Discount Plans - these are not insurance plans but rather Preferred Provider Plans that offer access to network discounts with contracted providers.  They are listed here only to point out that some people confuse these with insurance plans. Discount plans may provide a reduction in cost for medical, dental, prescription, eyeglasses, alternative medicine and chiropractic care.  These plans should be inexpensive, typically about $150 per family per year.  Beware of the many overpriced plans being sold on the Internet, particularly those posing as insurance plans.  And before jumping into one of these plans, check the PPO discounts already provided within your existing medical insurance plans.  Some health insurance plans have built-in PPO discounts that are not widely publicized.

Personal Assistance

OnlineAdviser service at MedSave.com provides free assistance with questions about selecting any of these types of of health plans.

 

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