Things You
Should Know About Health Insurance: Ten Tips and Advisory Notes
By Colleen
Gleason
In the United States, the bulk of the insured population receives
health benefits from their employers (or that of their spouses).
Despite the fact that your employer may be making the selection of
what type of program to offer (HMO, PPO, etc.), you as an enrollee
have certain decisions you need to make. And if you are
self-employed or nearing retirement, or do not have access to group
benefits, you will take an even more involved role in making your
decision.
Here, then, are some things to be aware of as you muddle through the
maze of health insurance in the United States.
1. Know Your Rights: COBRA
COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal
law that requires most employers with 20 or more employees to offer
employees continuation of their health insurance (and dental and
vision) upon termination (unless you are terminated for gross
negligence or misconduct). This continuation of coverage is
available to you and your family for 18 months after the "Qualifying
Event," which in this case is the termination of your employment.
You will pay the entire amount of monthly premium for the same
coverage you had, plus usually about a 3 percent administration fee.
The benefit of this is that you can maintain the same insurance at
group rates.
There are strict deadlines that both the employer and you must
follow in offering and enrolling in COBRA. And in fact, the way the
dates are structured, the advantage is yours, the terminating
employee. The way it's structured, you could potentially be covered
by COBRA for up to 60 days without paying a cent!
Also, if you are losing your coverage as a result of the death of a
covered spouse, or divorce, you can elect COBRA for up to three
years-instead of 18 months.
For more information on COBRA,
go here.
2. Know Your Rights: HIPAA
HIPAA (also known as the Health Insurance Portability &
Accountability Act of 1996) did two main things to protect
consumers. First, it made it easier to get and keep your health
insurance. And secondly, it put guidelines in place to protect your
privacy.
The first part of HIPAA guarantees that if you are covered by a
group health plan and you decide to move to another health plan
(whether it be through a new employer or to just to a different
plan), any existing health conditions you might have will still be
covered. Insurers used to either decline a person who wanted to move
to a new plan, or they would put a pre-existing condition
restriction on that person's policy so that no claims related to
that condition would be paid for a specific amount of time. So this
helps, for example, a woman who might be pregnant, whose husband
changes jobs in the middle of the pregnancy-when he goes on the new
employer's health plan, his wife is covered for the pregnancy and
delivery without restriction.
The other thing HIPAA did to help get and keep coverage is that it
defined "Qualifying Events." If an employee experiences a
"Qualifying Event," say, for example, the birth or adoption of a
child, or a marriage, or his/her spouse loses their insurance
through their employer...HIPAA allows the employee to add the
affected dependents to the health plan at that time, instead of
waiting for the annual open enrollment. So this means if Betty, who
is covered under her employer's health plan, is married to Ron, who
covers the children and himself through his employer, and Betty
quits her job because she's going to have another baby...she can
enroll in Ron's health insurance and be covered for the pregnancy
and delivery. Just like that.
Now the other part of HIPAA is related to privacy. I'm sure if
you've been in your doctor's office in the last two or three years,
they've given you a privacy statement and asked you to sign it. This
is part of HIPAA-and it's designed to protect you from what could
balloon into discrimination if it gets out of hand. If you have a
health issue, or your spouse or child does, you don't necessarily
want your employer to know about it. HIPAA guarantees that your
medical practitioners can't release that information to anyone
without your express permission.
For more information on HIPAA,
click here.
3. Know Your Rights: Medicare & Medigap Coverage
Most people know that Medicare is available to you when you reach
age 65, but many people aren't aware that someone who is permanently
disabled can enroll in Medicare after the age of 18. In my health
insurance agency, I've talked with more than one person who was
permanently disabled and had no idea that Medicare was an available
option.
You are automatically enrolled in Medicare Part A when you turn 65,
but you have to enroll in Medicare Part B and you have to pay the
monthly fee for it.
Part A is the hospitalization; Part B is the physician office visits
and outpatient coverage.
Medigap, or Medicare Supplementary, Coverage is regulated by the
U.S. government but is not offered by the government. While you are
on your own when you are searching for a Medigap policy, the Centers
for Medicare and Medicaid have done an excellent job of regulating
how insurance companies that offer Medigap plans advertise this
coverage. All the marketing materials have to be approved by the
Centers, and all of the plans are identical. It makes it very easy
for a senior to review and understand the material.
A very important note about applying for Medigap coverage: if you
apply for this kind of supplemental coverage in the six months
before you turn 65 or within the six months after you turn 65, there
will be no underwriting on your plan. That means that regardless of
your health condition-you could be in the hospital on a
respirator-the plan has to take you. So, I highly advise anyone who
is turning 65 to enroll in a Medicare supplemental policy during
that window...because if you develop a health problem later, you
won't be able to get Medigap coverage.
For more information on Medicare,
visit the
official site.
4. A Little Trick...
This isn't true in every case, but the marketing director of one of
the health plans that I represent gave me this hint; so if it
applies to you, you might want to check it out.
If you enroll in an individual health plan before you turn 65,
enroll in one that offers a good prescription drug program. And then
keep this plan even after you turn 65, and it will be the best
Medicare Supplementary/Medigap health insurance you could find!
Since most Medigap plans offer very limited prescription coverage, a
standard health plan with prescription coverage will serve you well.
Now this may not work for all plans, but check it out, and if you're
healthy and nearing 60 or older, and can afford it...buy a plan and
you'll have great prescription coverage even with Medicare.
5. Health Insurance Premiums as a Tax Deduction
2004 was the first year that the IRS allowed a self-employed
individual to deduct 100 percent of health insurance premiums, up
from only a portion in previous years. So if you are self-employed,
take the write-off! (Talk to your accountant first, though, to make
sure you qualify!)
6. Health Savings Accounts
2004 was also the year that Health Savings Accounts, or HSAs, were
unveiled. In my opinion, this is one of the smartest things you can
invest in-particularly if you are self-employed or have to buy
insurance on your own.
An HSA is a special savings account that can be used to pay for
health-related costs, as defined by the IRS. The contributions to
this account have similar tax benefits as a 401(k) or IRA, but funds
can be withdrawn at any time to pay for health care costs. Money can
accrue in this account until the account owner turns 65, at which
time funds can be withdrawn for any reason without penalty.
You must buy a health insurance program to be eligible for an HSA,
and the program you buy must be a designated High Deductible Health
Plan (HDHP). In other words, just because you have a health plan
that has a high deductible (over $1,000) doesn't mean you have an
HDHP. You must pay your monthly premiums for this plan.
The benefit to an HSA fund is that you don't lose the money if you
don't spend it. You can contribute up to your deductible amount each
year, and if you don't spend the money, it continues to accrue until
you take it out. With a HAS, you are investing in yourself and your
future instead of paying money to a health insurance company.
You can withdraw the money from your HSA to pay for any medical,
dental, or vision expenses (as defined by the IRS) for yourself or
your dependents. Even if you no longer have an HDHP, you can
withdraw the money to pay for medical costs. (You can't contribute
to it though.)
HSAs offer tax benefits too! Just like a SEP, IRA, or 401(k), any
money you contribute to an HSA can be deducted from your taxes.
For more information about HSAs, contact your health insurance agent
or your health insurance provider. Or if you're in Michigan or Ohio,
you can contact me!
7. Flexible Benefit Accounts (aka Section 125 Accounts)
If your employer offers a flexible spending account, make sure you
take advantage of it! Many people don't realize how beneficial it
can be.
A flexible spending account is different from a Health Savings
Account, so don't get the two confused! With a flexible spending
account, you designate an amount of money each month to be deducted
from your paycheck prior to taxes being calculated on your pay. This
means you are being taxed on less money!
The amount that you have deducted is set aside and will be
reimbursed to you for any medical, dental, or vision expenses you
have throughout the year-such as copays, deductibles, or even
services that aren't covered by your health plan-as long as it meets
IRS guidelines.
The big difference between a Health Savings Account and a flexible
spending account is that if you don't use the money in a flexible
spending account during the calendar year that you save it in, you
lose the money! So make sure if it's near the end of the year and
you haven't spent all your money, you buy that new pair of glasses
or think about that Lasik eye surgery!
8. Coverage Between Jobs
If you find that you need health insurance between jobs, the best
thing to do is to keep your COBRA option alive. But if the time span
is too long, or you simply can't afford the cost of COBRA, then you
can elect a short-term health insurance policy.
A short-term health insurance policy can only be in force for six
months, so it's truly just a temporary solution. And most companies
won't issue a policy if you have had serious health problems in the
past. But if you are basically healthy and only need something to
cover you while you're waiting for your new job's insurance to kick
in, go for it. It's very inexpensive; but it will only cover
emergency or urgent situations.
9. NEVER, NEVER, NEVER cancel your insurance...
...until you have another policy in place and approved. No matter
how certain you are that it will go into effect, or whether you've
paid money with the application...never cancel an existing policy
until you have something in writing from the insurance company or
your employer that you are covered.
10. Don't forget your other "health" insurance.
By that I mean long-term care, disability and life insurance.
I look at "health" insurance as having four parts. Most people are
pretty aware of the pitfalls of being without health insurance, and
most people do make the effort to get a health insurance plan. But
the three other legs of the stool are just as important for your
financial and mental well being!
Health insurance will help to pay the bills to keep you healthy or
help you to recover from an illness. But what happens if you're sick
and can't work? How are you going to pay the health insurance
premiums...not to mention your mortgage or rent, your car payment,
your grocery bill...?
Disability insurance is also called "income replacement" insurance,
and that's exactly what it does-replaces your income if you are
sick. Many employers offer disability insurance, but if you are
self-employed or don't have this kind of coverage, it's just as
important to have this coverage as well.
Another type of insurance policy that is often overlooked,
especially by younger people, is long-term care insurance. This
means coverage for nursing homes or convalescent centers, or places
like Alzheimer's facilities.
MEDICARE DOESN'T PAY FOR NURSING HOMES.
HEALTH INSURANCE POLICIES DO NOT PAY FOR NURSING HOME CARE.
Many people are under the impression that if they end up in a
nursing home, they will be taken care of by Medicare...and that's
simply not true.
Long-term care insurance is the only type of insurance policy that
will cover your stay in a nursing home or other long-term care
facility. The good thing is if you buy it when you're young, it's
cheap. And the rates stay the same forever. But if you wait until
you are older, guess what? The rates are too high! So consider LTC
insurance when you're looking at your future. You don't want to
spend your children's inheritance-or your spouse's retirement-on
your nursing home bills.
And, finally, the fourth leg of the stool is life insurance. The
important thing to remember about life insurance is that it's for
your loved ones when you're gone. If you're the sole breadwinner in
your family-or contribute in any way to the family income-you'd
better have at least a good, solid term-life insurance policy that
will take care of your family for at least 5-10 years. If something
happens to you-and we all know it can happen in the blink of an
eye-you don't want financial worries to add to their burden of
grief.
Term-life insurance is inexpensive. Buy it, and keep the policy in
force, and you'll know that if something happens to you, at least
your family won't have to worry about money and losing their home.
All four legs of the stool are important. You wouldn't go without
home or auto insurance; why would you risk the only thing that's not
replaceable? You.
Colleen Gleason has been in the health care industry for fourteen
years. When she's not writing novels, she runs her own health
insurance agency licensed in Michigan and Ohio. You can visit her
company website at
http://www.theschultegroup.com.
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Top 10
Favorite Valentine's Day Gifts
I have to
say my best Valentine present is my husband. We were married on
Valentine's Day. Since Valentine's Day and our anniversary are the
same, we decided from the beginning that we would get something for
the house rather than something for each other. My favorite of all
the things we've purchased over the years is the beautiful
grandfather clock I have in my living room. - Merrillee Whren
I received my engagement ring in a box of Godiva chocolates on
Valentine's Day. We were already engaged, but he had the ring made,
and it took forever. We were married on March 6, so I only got to
wear my engagement ring for three weeks before it was joined by the
wedding ring. Still, he managed to surprise me with that box of
chocolates. - Stephanie Feagan
Early in our marriage, when things were tight, my husband used to
come up with the best Valentine's gifts. One year, right after we'd
moved into our first house, he gave me a rose bush. As he said, that
way I'd have roses for most of the year instead of just a few days.
Another year it was a gardenia bush. One of the toughest years was
when we were both in college and living on bologna sandwiches and
hot dogs. That year he gave me two sirloin steaks for Valentine's
Day. - Pam Payne
It was still early in my relationship with Joe, long before we got
married, that he told me we were going on a camping road trip, and
that the destination was a surprise. As he threw the tent and
sleeping bags in the trunk of the car, he said, "Bring a swimsuit,
because we might stay somewhere with hot springs." I thought we'd be
going to Utah. It wasn't until we took the highway exit for the
airport that I guessed something big was up, and it wasn't until Joe
was forced to tell the shuttle driver we were flying on Mexicana
that I started to squeal. I didn't have a passport - had never been
out of the country, in fact. Joe had asked my parents to mail him my
birth certificate. We spent four days at a resort in Puerto
Vallarta, snorkeling, swimming, and discovering fresh mango
sprinkled with chili powder, which we bought from a little stand on
the beach. That last activity was a mistake, but the traveler's
diarrhea held off until we were back in the Denver airport.
Kaopectate clears that right up, by the way. - Kiki Clark
Well, the best would have to be my engagement ring. We were in our
last year of college, and my hubby-to-be didn't have a car. He
walked all over the town where we went to college going from jewelry
store to jewelry store - in February, mind you - until he found the
ring he liked. When I saw the dozen red roses, I was happy. When I
saw the little black velvet box, my eyes about popped out of my
head. After the proposal, I ran around the whole dorm showing all my
friends. A few years later, after we were married and living in
another city, I walked out to my car to go to work on Valentine's
Day and found a stuffed puppy dog sitting in my car seat holding a
Three Musketeers bar. It was so cute! I still have the puppy, but
the chocolate is long gone. :) - Trish Milburn
My dh has wonderful taste. He pays attention to what I am pointing
at. Actually, since my birthday comes the day before Valentine's
Day, the two occasions have been rolled together by my family for as
long as I can remember. Usually dh just says, "Where would you like
to go for dinner for your birthday?" And that takes care of
everything. But a number of years ago, back when everyone was
totally broke, including us, he got all the kids together and they
all chipped in to buy me a wonderful panda-shaped teapot. It's still
my favorite in my entire collection. Then there was the year he
bought me a huge, gorgeous amethyst set in gold. It was later
stolen, but we replaced it with one that was slightly smaller but a
much deeper color with a reddish fire. It will always be my favorite
piece of jewelry. No February lady can ever have enough amethysts. -
Delle Jacobs
Last Valentine's Day my youngest daughter, age 11, and my husband
went down to the local shopping center and bought me a tiny gold
heart on a chain that I had admired one day while I was shopping
with my daughter. I was impressed that she remembered. I can imagine
her dragging my husband out on a shopping adventure and pointing to
the necklace and saying, "Buy that for Mom, it's romantic." Gotta
love your daughters. It's the second one in my collection. The first
one my husband bought all on his own the week before our wedding.
Still my favorite piece of jewelry. - Lorelle Marinello
Right after I quit my job to stay home with our baby, my husband and
I were so broke we couldn't afford cards. So we made our own. Those
are still my favorite. - Jill Monroe
The gifts I get are usually kind of generic: a sweater or something.
But my husband usually gives me a card with something heartfelt that
he has written himself. THOSE, I cherish. But as for the best gift?
This bibliophile likes a gift certificate for the bookstore! And a
trip to the Hot Springs is pretty nice, too. - Dani Collins
Valentine's
Day gifts? What's Valentine's Day? Interesting fact: in Korea (where
I've lived since 1995) Valentine's Day is where girls give their
GUYS chocolate. For the reverse, you have to wait a full month for
White Day. I'm not a huge chocolate eater, so my best White Day
present was a couple of years after we married when my husband
tracked down a store that actually sold tortilla chips and salsa for
me. At that time, no one here knew what that was. Since I had been
extremely homesick, that was the most thoughtful thing he could have
done! - Ila Campbell
To read last
month's Top 10 article, click
here
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