The American Landscape of Health Insurance
Insurance is important — unexpected tragedies such as illness or injury will leave you or your family worried about the expenses of care rather than the care itself. Health insurance covers the essential benefits that are important to maintaining your health and treating unforeseen illnesses and accidents. America has a vast and complex health insurance landscape, and since the passage of the Affordable Care Act in 2010, insurance has been more accessible and affordable to all. Beyond these “marketplace” plans, there lies a variety of other coverage options: Medicaid, Medicare, Veteran Care, Group Coverage, COBRA, and short term or fixed indemnity plans. Let’s get started!
Major Medical Coverage
Major Medical Insurance is any plan that meets the parameters of minimum essential benefits defined by the Affordable Care Act (ACA) for individual or family coverage. These benefits include hospitalization, outpatient care, preventative and emergency care, prescription care, and mental health or addiction counseling. You can enroll in an ACA plan publicly though official state and federal marketplaces, but also off exchange through licensed private brokers. What distinguishes an ACA plan is its wide scope of coverage and its coverage of pre-existing conditions, but this wide scope has also caused higher premiums for members. ACA plans can only be accessed during the annual enrollment period or in a special enrollment period, if you qualify for one. SEPs continue to be available as the COVID-19 pandemic continues— please visit healthcare.gov for the most updated information regarding enrollment access. ACA plans that are sold during AEP or SEP qualify for government subsidies that significantly reduce the cost of premiums depending on taxable income per year.
Group Coverage and COBRA
49% of Americans are covered through their employer— that's nearly 157 million people! Each employer typically presents a few different plans to choose from after employment begins. Almost all employers will offer assistance for this health insurance cost. When choosing your plan, it's extremely important to review the provider networks of each plan, as they will shift your experience dramatically depending on the type of care you need and are accustomed to. When transitioning between jobs, COBRA, which stands for the Consolidated Omnibus Budget Reconciliation Act of 1985, is a program that can extend your current coverage for medical, dental, and vision coverage. Recently, COBRA was expanded through the American Rescue Plan of 2021, so those who experienced involuntary job loss or a reduction in hours leading to a loss of coverage would see a 100% subsidy through September 31, 2021.
Fixed Indemnity Coverage
A fixed indemnity plan is one that pays a predetermined amount of money for any qualified medical service. It is designed to be a supplemental plan that helps with your deductible or covers a copay or coinsurance amount, which can be expected from traditional health insurance plans. For individuals who don’t need a wide scope of medical coverage, fixed indemnity plans offer coverage at a more affordable cost, as they are designed to have $0 copays and deductibles.
Other Supplements: Catastrophic Plans and Short Term Health Insurance
Catastrophic plans differ from major medical health insurance in that they offer a very limited range of benefits. These plans will typically cover expenses associated with a hospitalization, surgery, major illness, or injury. However, they will not cover preventive care or minor health issues. The premiums for these plans are far lower than the premiums for major medical health insurance since they offer emergent, not preventative, coverage.
Short-term health insurance is another option that allows people to buy coverage that lasts up to 12 months. Short-term health insurance can be a good option if you find yourself in a transition such as moving or a job change and would like to have a health plan in case of an emergency. They are often structured like ACA plans, with negotiated rates (network care) and cost-sharing, but they are shorter in length, can require medical underwriting, and they can set coverage maximums.
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A copay is a fixed fee that you may owe for a particular medical service, such as a visit to your Primary Care Provider, Urgent Care, or a prescription. You can usually find this directly on your health plan ID card.
A deductible is the amount you have to pay before your health plan begins to share the cost of your covered services. For example, if you have a $10,000 bill, but a $2,000 deductible, your insurance will share the cost (partially or fully, depending on your plan) for $8,000.
After you meet your deductible, coinsurance is how you will share your medical expenses with your health plan until you hit your out-of-pocket maximum. For example, if your coinsurance is set at 20% and you have a bill for $1000, you are responsible for $200. You can only share costs for approved medical services.
Out-of-pocket maximum is the most you will pay for covered medical expenses per calendar year. Once you reach it, your plan will pay in full for the remaining costs of covered care you may incur for the rest of the year.