Individual Health Insurance

Individual Health insurance is a good way to help you manage your healthcare-related costs. In exchange for paying premiums (a set amount of money each month) to a healthcare insurer, you get benefits to pay for some if not all of your eligible health care expenses.

There are 5 different types of insurance policies depending on your state of residence. If available you can choose from Self Insured, POS, HMO, EPO, or PPO plan.

Self Insured: This is a way to cover your healthcare from your own pocket. You manage, negotiate, and fully fund the cost of your health insurance.
This is not a plan and is equivalent to being uninsured as the full financial responsibility will fall to you.
Those with significant means may opt to self insure their healthcare or that of their family by using a third-party administrator for claims from providers or specifically contracting with providers or paying providers directly in cash at negotiated rates.

Point of Service (POS): The POS plan allows you to pay less when using in-network doctors, hospitals, and other health care providers. A POS plan will require you to get a referral from your primary care provider in order to see a specialist.

Health Maintenance Organization (HMO): The HMO insurance plan usually limits coverage to care from doctors who work directly for or contract with the HMO. It generally will not cover out-of-network care unless there is an emergency. In order to be an eligible subscriber or member of an HMO (covered by an HMO Policy), the HMO may require you to live or work in its service area. Most HMOs bundle care in an integrated manner with a focus on prevention and wellness to reduce the likelihood of future claims from preventable illness.

Exclusive Provider Organization (EPO): EPO’s are a type of insurance plan that provides managed care. Services are only covered if you use the plan’s providers and facilities. These plans may offer some out of network coverage and may offer coverage at out of network providers in the case of an emergency.

Preferred Provider Organization (PPO): With a PPO you are not restricted to any specific provider. You may however experience a larger cost-sharing amount if the provider is not in-network. These plans tend to provide the most freedoms without the need for referrals.

Healthcare can be very expensive, it is a wise idea to carry health insurance so you’re prepared for when you or your family have healthcare needs.

How subtle policy differences can affect you.

We will review how two different policies can affect what you pay out of pocket. Let us review an example case from a fictional insured and fictional event.

Case Event: Ankle Fracture Insured: Susan Smith Age: 33 Policy: Major Medical (Non-employer or Exchange Subsidized) HMO

Susan is in good health, has visited two of her doctors, and received care before her insurance coverage was in force. Susan does not take any medication. In a recent hiking trip Susan fractured her ankle and sustained some minor cuts and bruising. Susan went to the emergency room and was admitted as an inpatient after the emergency room visit. Susan required surgery to address the fracture and physical therapy for 8 weeks. Susan’s Hospital and all Service Providers are In-Network providers.

In this example, we will review how specific items affect what Susan paid out of pocket.

Deductible: The set amount that she agrees to pay out of pocket each year before her insurance picks up the balance of in-network covered services.
Coinsurance: The percentage of the cost she will pay for covered services after the deductible has been reached.
Copay: The fixed fee that she pays out of pocket for each visit to a health care provider that is in-network

Plan Feature	HMO Tiered Silver Plan	HMO Gold Plan
Deductible	$4350	$1500
Coinsurance	30%	10%
Out of Pocket Limit	$7350	$3000
Copay for Primary Care	$30	$40
Copay for specialist	$50	$50
Drug Coverage	Yes Tiered	Yes Tiered
Copay for Outpatient Rehab	$30 Per visit limited to 40 visits per year	Pay $0 after deductible limited to 40 visits per year
Emergency Room Care	Deductible then 0%	Deductible then $200 co-pay per visit
Estimated Premium	$540.00/month ($6,480/year)	$690/Month ($8,280/year)

Susan received several explanations of benefits indicating the billed expenses below for her HMO Tiered Silver Plan.

HMO Tiered Silver Plan	Billed Charges	Discounted Charges	Covered Expenses	Patient Responsible
Provider 1 (Facility, ER, Radiology)	$4,500	$3,150	0	$3,150
Provider 2 (Surgeon, Facility)	$8,700	$6,090	$4,890	$1,200
Provider 3 (Physical therapy)	$2,250	$1,200	$0	$1,200
Totals	$15,450	$10,440	$4,890	$5,550

Susan received several explanations of benefits indicating the billed expenses below for her HMO Gold plan.

HMO Gold	Billed Charges	Discounted Charges	Covered Expenses	Patient Responsible
Provider 1 (Facility, ER, Radiology)	$4,500	$3,150	$1,485	$1,665
Provider 2 (Surgeon, Facility)	$8,700	$6,090	$5,481	$609
Provider 3 (Physical therapy)	$2,250	$1,200	$1,200	$0
Totals	$15,450	$10,440	$8,166	$2,274

Example Summary

In this illustration, Susan chose to save in premium by selecting the silver plan. In making that selection, she accepted the risk that should she be in need of care she could afford the associated costs. In making the silver plan selection under the above example the net result in direct out of pocket cost is an increase of approximately $1,426.

This is due to the difference in cost coverage between the plans ($3226) less than the cost approximate savings ($1800). In addition, Susan will have to spend an additional $1850 in order to reach her out-of-pocket maximum under the silver plan.

Under the gold plan, Susan would need to spend $726 to reach her out-of-pocket maximum and has a broad range of coverage once the limit is reached.