Individual Medical Health Insurance:
Individual/Family Plans (IFP’s) are usually for individuals that are not offered any or are provided an inadequate amount of insurance coverage by their employer. There are typically three types of plans available to individuals and they are detailed below. Individual plans usually do not offer the same benefits as group plans so you should consider your options carefully.
HMO ( Health Maintenance Organization):
An HMO requires you to choose a Primary Care Physician (PCP) from an Individual Practitioner Association (IPA) or Primary Medical Group (PMG) ( a clinic of doctors). The doctor acts as a “Gatekeeper” and controls your access to other doctors. You generally need to get a referral from your PCP to see a specialist. HMO plans will have co-pays for most services and 100% coverage for many others. Some lesser coverage HMO’s have deductibles for hospitalization. Access to providers is limited to the IPA or PMG. Usually no benefits will be paid for seeing providers outside the IPA or PMG unless approved prior to seeing them. Some HMO’s allow you to go to a specialist without a referral for a higher co-pay and one HMO allows you to go to a PPO doctor for a higher co-pay.
An HMO is only as good as the PCP you choose and the IPA or PMG they are with. These are the physicians and specialists who will be providing your care. You want to make sure your physician is a listed PCP and that the provider group has a good selection of specialists in every specialty. (If you need a particular specialist you want to make sure your PCP will have a choice of specialists to refer you to). You may want to contact your doctor’s office to see what their experience is with the HMO you are considering. The key to having a good experience with an HMO is your doctor’s ability to work within that HMO’s system.
PPO ( Preferred Provider Organization):
A PPO does not require you to choose a PCP or get referrals to see a specialist. A PPO plan allows you to go to a network of doctors without referrals. With a PPO plan your co-pays and percentages for services will be higher and you will usually have a deductible. You will have some benefit if you see a provider outside the network. PPO premiums are usually less than HMO’s and can provide substantial savings.
Most carriers will have several PPO’s to choose from. Some will offer small co-pays and deductibles and others will have larger co-pays and deductibles. The difference in premiums may be more than the benefit of the higher plan. Take a look at your usage of health insurance in the past and see which plan makes sense for your situation. Remember that you may have this plan for several years and as you get older your usage may increase. If you want to upgrade your plan in the future you may have to reapply and the carrier can decline your request, so think about your choice carefully. You can downgrade your plan usually without reapplying.
POS (Point-of-Service):
A POS medical plan is a combination of a PPO and an HMO. POS’s are almost identical to PPO medical plans. The major difference between a POS and PPO plan is that the POS uses a PCP like an HMO. With the POS plans, if you seek medical care outside of the HMO network, you will be responsible for full payment. On the other hand, if your PCP gives a referral for you to see a specialist outside of the network, the insurer will pick up most of the cost. As with HMO plans, POS plans typically include preventive care and health improvement programs.
Health Savings Accounts:
Medical Savings Accounts (MSA’s) are no longer available since 12/31/2004. They have been replaced by Health Savings Accounts (HSA’s). HSA’s are available from many carriers since January 1, 2005. To open an HSA you need to have an HSA compatible plan, a high deductible PPO plan where all services are subject to the deductible, be under 65 and not on medicare, and not claimed as a dependent on another person’s tax return. A bank establishes the HSA account. You fund the account at the beginning of the year. The amount is generally limited to 100% of the deductible amount for the year. For 2005, the maximum amounts are $2650 for an individual and $5250 for a family. There are also catch up contributions for individuals between 55 and 64 years old. You can use the funds for expenses and then what ever is left builds up like an IRA account. The downside is that the banks charge high fees for transactions and many people choose to leave the funds in the account and pay cash for expenses. This creates another IRA vehicle for retirement. HSA’s are becoming popular since the premiums are low and they create another source of retirement and tax deductions for contributions to HSA’s. While a person is under 65 they can use the funds to pay for medical expenses including dental, long term care, medicare, and COBRA policies and not pay taxes on the funds being withdrawn. For a complete listing of allowable medical expenses refer to IRS publication 502. If the funds are used for non medical expenses then they are taxed for early withdrawal plus a 10% penalty. After 65 you can use the funds for allowable medical expenses, tax free. If you use it for other expenses you only pay the appropriate taxes, without the 10% penalty. After age 65 you can no longer contribute. You can also designate your spouse as a beneficiary for the funds. There are currently over 26 HSA compatible plans in California. We can provide additional information about HSA’s upon request.
Underwriting:
The insurance carrier’s in California have the right to underwrite and decline Individual and Family Plans (IFP’s). They will review the information on your application, contact doctors and hospitals if they need medical records, and review past claims if you were insured with them in the past. They will cover most pre-existing conditions if you are approved. Some carriers have several rating tiers and may charge you additional premiums based on your medical history. If your application is approved and you have not had insurance within the last 63 days there may be a waiting period (usually 6 months) for pre-existing conditions.
Federal COBRA (Consolidation Omnibus Budget Reconcilliation Act ) or CAL-COBRA and HIPAA (Health Insurance Portability and Accountability Act):
If you have recently left a job that provided benefits you should look into their COBRA plan. If you are already in a COBRA plan you need to check if it will be running out soon. If it is, you should be looking at IFP plans to see if your COBRA can be converted. Waiting until the last minute can be costly and you may find that you can’t be covered. It is a good idea to look into IFP plans while you are still covered by COBRA. It can take a couple of months for carriers to get doctor records and approve your application. If you can’t get IFP or conversion coverage after your COBRA runs out you can get HIPAA (Health Insurance Portability and Accountability Act of 1996) coverage. This is usually expensive, but it is better than no insurance coverage at all. Most carriers have HIPAA plans available.
