For many people, health insurance is something they take for granted. They are fortunate enough to work for companies which offer health insurance as part of the compensation and benefits package. For others, health insurance is something they must purchase on their own. Last week a woman called our office with just this question: “How do I purchase health insurance?” It seems that up until recently, she has always had health insurance through her employer. At the age of 42 she found herself in the not-unique position of needing to purchase health insurance and having no idea how to go about it. We thought addressing this issue would make for a good column.
As many of the faithful readers of this column will know, there are two ways you can have health insurance. Either through your employer (or spouses’ employer) or self purchased. If you are eligible to be covered under a group plan though your employer or your spouses’ employer, you are NOT eligible to purchase an “individual” plan. The good news about this is, generally speaking, you wouldn’t want to. Having health insurance on a group basis usually means better coverage for less money. There is an exception to this, of course, and if you find yourself covered by a plan sponsored by your employer that is not working for you at all -- perhaps it is a very limited HMO plan with no out of network benefits and you need to see out of network physicians -- you can purchase an individual plan during open enrollment month – which is October. It will not become effective until January first and you must then refuse the group health insurance, effective January first.
For those people who do not work for a company which offers health insurance, you must purchase it on your own. This also includes self-employed people who do not have any employees; children who recently graduated college, but have not yet found a job; and also women whose husband’s are a few years older than them and retire at the age of 65, leaving the wife with a few years to go until Medicare kicks in for her as well. Certainly that scenario can be reversed – the husband may be younger and covered by a wife’s group plan until she retires at 65.
The first step would be to find a good agent who specializes in health insurance and speak to that person. Doing so will cut to the chase and save you hours of otherwise tedious and boring research. You can also visit the state website www.state.nj.us/dobi. There are many aspects to consider when purchasing health insurance. Type of plan, access to doctors, and premium being among the most important. Let’s look at them more specifically:
Types of plans:
Traditional indemnity plans offer you the most amount of freedom of choice. You do not need to choose a primary care physician, or get referrals. Indemnity plans are what we were all used to 10 years ago. They pay a percentage of the medical bills once you have satisfied the deductible. They also offer a “well-care” allotment – usually $500 first year of life, and $300 every year thereafter, which is payable at 100% up to this limit, before you satisfy the deductible. The bad news is that the deductibles are growing higher each year in order to keep the premiums under control.
Individual PPO’s are next in line. These products, until recently were seen only on the small employer market, offer larger networks than their HMO siblings, and generous benefits. In our opinion, they combine the best of both worlds: Strong out of network benefits if needed, and minimal out of pocket expense if you stay in network. These plans do utilize networks of physicians and medical providers, but PPO networks are usually larger than HMO networks, meaning you have more doctors to choose from. Furthermore, with a PPO you do not need to choose a primary care physician or get referrals. If the doctor is in the network, the plan will pay at the specified in-network amount. If the doctor is not in the network, you can still see him or her, but then it will be subject to the out of network deductible and co-insurance (amount you pay). The freedom is still there -- you can use doctors who are in or not in the network. It is up to you. One of our favorite individual PPO’s at present is offered by Oxford. This plan has a $20 co-pay for doctors’ office visits when in network, and works like a traditional 70/30 plan with a $1,000 deductible out of network.
Next there are HMO’s. HMO’s were designed with the goal of reducing costs while administering quality medical care. Their full name is Health Maintenance Organization. While that lofty title may seem charming, after all – which of us isn’t trying to maintain our health? It does leave one wondering, what happens if I get sick? HMO’s certainly work for many people. While these plans tend to be more benefit rich on the wellness side of the fence, hardcore HMO’s do not offer ANY out of network benefits. If your doctor wants you to see a specialist, he/she can only refer you to other physicians in the HMO network for the plan you have. Furthermore, if you belong to an HMO based in NJ and get sick while traveling on business or away on vacation, you might have difficulty getting coverage for that care. Life threatening medical emergencies are the exception – but believe me, there are plenty of times when you are simply ill and need a doctor that do not count as life threatening. The irony is that HMO’s are no longer the cheapest game in town. Talk to your health insurance advisor about what product is right for you!
Items you will want to consider:
Do you travel outside of New Jersey frequently? Is having access to physicians in other states important to you? Do you presently have physicians you are seeing that you would like to be able to continue to see – or are you willing to let the insurance company dictate to you who you can and cannot see? Do you prefer a plan that charges a higher premium, but your co-pay for each visit will be lower, or do you prefer to save as much money as possible on the premium and are willing to pay a bit more out of your pocket if/when services are needed?
Don’t tell me you are healthy and don’t need health insurance! Even the best psychic in the world doesn’t have a crystal ball capable of showing who will encounter what medical challenges at what time. Being healthy is wonderful, but it does not mean you do not need health insurance. The same logic would ask can you forgo auto insurance if you have not had an accident. Or can you pass on homeowners insurance because you do not expect your house to burn down? Of course not! You purchase health insurance to protect you from spending unlimited amounts of money out of your pocket should you encounter any medical difficulties.
In summation, to purchase health insurance, you can call us or you can call any other insurance agency or you can call the New Jersey Department of Insurance. The Department of Insurance can give you names of companies selling individual insurance. They cannot sell insurance to you.
Irene Card & Betsy Chandler share the responsibilities of running Medical Insurance
Claims, Inc. a health insurance services company. If you have questions relative to this
column or other related topics, we invite you to call (973) 492-2828, or visit our web
site at www.miconline.com.
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