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What is a Major Medical Plan?
Comprehensive plans cover most medical expenses - hospital expenses, physician and surgeon expenses, nursing care, drugs, physical therapy, diagnostic x-rays and laboratory services, medical supplies and equipment, transfusions and more - under one policy. Major medical plans, whether supplementary or comprehensive, usually include two important features: deductibles and coinsurance. These features require the insured to absorb some of the cost of his or her medical expenses, allowing the insurer to avoid small claims and keep the cost of premiums down. A Limited medical plans usually does not include either of these features; instead they impose limitations in the form of maximum benefit amounts that will be paid by the Insurer.
What Factors Affect Insurance Premiums?
There are several factors that effect health insurance premiums. These include the insurance company’s income, interest income, and expenses, the type of benefits they provide, and morbidity rate. Morbidity is the expected incidence of sickness or disability within a given age group during a given period of time.
What Factors Affect A Risk?
Factors that effect a health insurance risk include the applicant’s physical condition, moral hazards and occupation. Other risk factors are medical history of applicant, age, sex and avocations (hobbies) of the insured or the group of insureds.
What is a Deductible?
A stated initial dollar amount that the individual insured is required to pay before insurance benefits are paid.
What is Coinsurance?
Coinsurance is a sharing of expenses by the insured and the insurer. After the deductible is satisfied by the insured, the insurer pays a high percentage of the additional covered expenses and the insured is responsible for the remainder up to a stated limit. Coinsurance provisions are effective throughout the duration of a policy.
What is a Waiver or Rider?
Some individuals have an existing impairment that increases their health risks and so are required to pay an extra premium or they may be issued a waiver which stated that the policy does not cover or extend to any disability or illness resulting directly or indirectly from the stated health risk factor. A waiver is dated and bears the signature of an officer of the company and, in many cases, the applicant. If the insured's condition improves, the company may be willing to remove the waiver. Meanwhile, the person at least has health protection from other hazards that he or she otherwise could not obtain.
What is a Health Savings Account (HSA)?
A Health Savings Account is an alternative to traditional health insurance; it is a savings product that offers a different way for consumers to pay for their health care. HSAs enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis. You must be covered by a High Deductible Health Plan (HDHP) to be able to take advantage of HSAs. An HDHP generally costs less than what traditional health care coverage costs, so the money that you save on insurance can therefore be put into the Health Savings Account. You own and you control the money in your HSA. Decisions on how to spend the money are made by you without relying on a third party or a health insurer. You will also decide what types of investments to make with the money in the account in order to make it grow.
What Is a “High Deductible Health Plan” (HDHP)?
You must have an HDHP if you want to open an HSA. Sometimes referred to as a “catastrophic” health insurance plan, an HDHP is an inexpensive health insurance plan that generally doesn’t pay for the first several thousand dollars of health care expenses (i.e., your “deductible”) but will generally cover you after that. Of course, your HSA is available to help you pay for the expenses your plan does not cover. For 2008, in order to qualify to open an HSA, your HDHP minimum deductible must be at least $1,100 (self-only coverage) or $2,200 (family coverage). The annual out-of-pocket (including deductibles and co-pays) for 2008 cannot exceed $5,600 (self-only coverage) or $11,200 (family coverage). HDHPs can have first dollar coverage (no deductible) for preventive care and apply higher out-of-pocket limits (and copays & coinsurance) for non-network services.
How can I get a Health Savings Account?
Consumers can sign up for HSAs with banks, credit unions, insurance companies and other approved companies. Your employer may also set up a plan for employees as well.
How much does an HSA cost?
An HSA is not something you purchase; it’s a savings account into which you can deposit money on a tax-preferred basis. The only product you purchase with an HSA is a High Deductible Health Plan, an inexpensive plan that will cover you should your medical expenses exceed the funds you have in your HSA. However, HSA trustees often will charge fees for their services.