Choosing a health care plan is a daunting task for anyone. It has only gotten more complicated in recent years as health care costs continue to rise and employers and health insurance companies introduce new products in order to make premiums more affordable for their customers. The key to finding an appropriate policy for you and your family is to strike a balance between the cost of premiums and the level of coverage. In order to effectively make these difficult choices, it helps to have a basic understanding of the types of coverage available in the health insurance marketplace.
Employer-based health insurance policies are the most popular in the United States. Russ Blakely of Russ Blakely & Associates explains: “Seventy million Americans receive their health insurance through employer based plans. Even a small company with two employees can have a group health plan.” The reason for the popularity of employer based health insurance is the cost savings. Often taken for granted, these savings can really add up.
Rob Huffaker, vice president and department manager of the employee benefits division of BB&T Huffaker & Trimble, Inc., explains the benefits of employer based health insurance: “The average single premium for health insurance is $365 per month. The average payroll deduction is $97. The average employee pays 26 percent.” With employers covering 74 percent of health insurance premiums, it’s no wonder such offerings are referred to as “benefits.”
If you are fortunate enough to be one of the 70 million Americans with this type of health care coverage, you will likely be faced with some choices. Joanne Denise, who is responsible for the brokerage operations of Strategic Employee Benefits at Northwestern Mutual, explains the basic policies available: “There are traditional PPO (Preferred Provider Option) plans with office copays and pharmacy copays. There are also high deductible qualified medical plans that enable you to open up an HSA (Health Savings Account). These are limited medical plans for people who want health care coverage, but prefer to keep their premiums within reason.”
The HMO (Health Maintenance Organization) policy used to be a popular health insurance option, particularly through employer-based plans, but it has fizzled out as an option in recent years. Huffaker attributes the drop in HMOs to the desire of most Americans to maintain a high level of control over their health care. “HMOs offer a significantly enhanced benefits package for employees, but reduced control,” Huffaker says. “Our number of HMOs is dwindling, as most clients prefer to remain in control of their health care decisions.” As HMOs gradually fade from the health care scene, most employers offer two types of policies: PPO policies with copays and qualified high deductible health plans that utilize Health Savings Accounts.
Individuals who are self-employed or who work for companies that do not offer health insurance benefits are faced with similar choices in health care plans. Mary Thompson, APR, media relations manager for BlueCross BlueShield of Tennessee, describes her company’s offerings: “Individuals can explore non-group options through our individual coverage policies. Just like in our group product offerings, we provide choices, from traditional PPO coverage to high deductible plans that couple with an HSA.” It is up to the individual to make the determination about what is the best fit. Unfortunately, coverage for individuals can be difficult for the many Americans who are not in optimum health.
Huffaker discusses the conundrum that often faces individuals searching for commercial health plans: “Individuals are not limited at all in the type of health care available to them; the problem is the cost and that is dependent upon the health of the individual. If they are not healthy, it is unlikely that they will qualify for health insurance.” Fortunately for Tennesseans who find themselves being turned away by commercial insurance companies because of pre-existing health conditions, they can turn to the state for government-subsidized care or CoverTN. According to the program’s website (www.CoverTN.gov), CoverTN is a partnership between the state, employers and individuals that makes health care coverage affordable for the state’s working uninsured. AccessTN, a CoverTN program, is specifically designed to cover Tennesseans who are uninsurable due to pre-existing health conditions.
With the economy in turmoil and many people in the Tennessee Valley struggling to stay financially afloat, Mary Thompson of BlueCross BlueShield of Tennessee has some advice: “BlueCross understands that many Tennesseans are searching and struggling to find health care coverage during these tough economic times. For those in a financial crunch, we encourage them to explore all of their options, whether through a commercial product or a government-subsidized plan. Help finding an appropriate plan can always be sought from a licensed broker or agent who is knowledgeable about health care coverage options.”
What about those individuals who do not fall into either category; those who are between jobs and have a gap in health insurance coverage? Joanne Denise explains how she would advise a client in this situation, “First of all, we’d have to see whether they are eligible for state or COBRA (Consolidated Omnibus Budget Reconciliation Act) and whether they are eligible for a federal subsidy.” COBRA is a federally regulated law that gives employees and their eligible dependants the opportunity to maintain their employer’s group coverage when they would otherwise lose coverage.
Unfortunately, COBRA premiums can be cost prohibitive for some, particularly those who have experienced a loss in income. The premiums amount to the actual cost of the premiums to the company, so, in many cases, this can represent a significant increase in monthly payments. There is help to be had, at least temporarily. People who qualify for COBRA as a result of being involuntarily terminated from their jobs may be eligible for a special temporary government subsidy. The American Recovery and Reinvestment Act of 2009 (ARRA) allows individuals to receive assistance with their COBRA premiums.
According to the U.S. Department of Labor’s website (www.DOL.gov), ARRA stipulates that eligible individuals pay only 35 percent of their COBRA premiums, and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. The premium reduction applies to periods of health coverage beginning on or after February 17, 2009, and lasts for up to nine months for those eligible for COBRA during the period beginning September 1, 2008, and ending December 31, 2009, due to an involuntary termination of employment that occurred during that period.
COBRA applies to employers with 20 or more employees. For smaller companies with less than 20 employees, individuals who lose their jobs are eligible for assistance with state continuation and could explore other options, such as an individual policy, a temporary policy, limited medical coverage or, if necessary, CoverTN or AccessTN. These same options are available to those who have lost their jobs to companies who have declared bankruptcy, thus making COBRA unavailable to them.
No matter what your situation, there are factors within your control. Keeping yourself healthy is one. A nationwide shift in focus to wellness and prevention will reduce overall health care costs dramatically. Quit smoking, eat your veggies and get plenty of exercise. In the meantime, explore your health insurance options, consult a broker if necessary, and try to find that balance between cost of premiums and quality of care.