The cost for health insurance is not necessarily an unavoidable expense. There are a variety of factors that determine the cost of health care, including the type of plan, the level of deductible, preexisting conditions, tax credit options, and medical cost sharing plans. But before you begin shopping around, it’s important to know what you’re dealing with.
Preexisting conditions
Preexisting conditions are medical problems that are diagnosed before you enroll in a new health plan. They can be simple illnesses or chronic illnesses, but they can also be less obvious.
Many Americans are affected by preexisting conditions. For example, high blood pressure is considered a preexisting condition. Having a high blood pressure, hypertension, or arthritis could increase your out-of-pocket costs.
Insurers have long used your medical history to charge you more. However, the Affordable Care Act (ACA) prohibits insurance companies from charging you more for preexisting conditions.
ACA rules also ensure that you can get health coverage for preexisting conditions without facing a waiting period. When you enroll in a Marketplace plan, you can’t be denied for a preexisting condition. Similarly, you can’t be denied coverage if you have a pregnancy.
The number of people with a preexisting condition has been rising. It’s estimated that up to 25 percent of adults under age 65 have a preexisting condition.
A national survey showed that 36 percent of people were rejected by their insurers because of a preexisting condition. Meanwhile, women were particularly affected by preexisting conditions. Among those with a preexisting condition, the average out-of-pocket cost for asthma was twice as high as it was for those without a condition.
However, some states have restricted the amount of time a preexisting condition can be excluded from a policy. These exclusion periods do not apply to other types of care.
A study found that the average out-of-pocket costs would triple if you have a diabetes or cancer. This would mean that your spending for other services would need to be increased to reach your deductible.
High-deductible health plans
High deductible health plans can be expensive, but they do offer a number of benefits. The most notable is the lower premium, but you may have to pay more out of pocket when you have an unexpected medical emergency. You may also want to consider accident insurance. It’s not always easy to tell when you’ll need medical attention, but with an accident plan, you can rest easy knowing you’ll be covered should you need to be hospitalized.
High deductible health plans are often a good deal for individuals and families. In fact, the CDC estimates that over 30 percent of Americans with employer-sponsored health insurance have a high-deductible plan. Luckily, these plans typically come with a health savings account (HSA), which is a powerful tool for supercharging your retirement funds.
As with any medical plan, you’ll need to shop around for the best deal. One option is to ask your doctor if there’s a better rate for an expensive procedure. Another is to buy an accident insurance policy that doesn’t require you to wait until you’ve reached your deductible before you can file a claim. Finally, the ACA mandates that you get at least minimal coverage for international travel. If you’re planning to travel abroad, you may also wish to buy an insurance policy for your laptop, phone, and other gadgets.
The cost of health insurance has skyrocketed over the past few years, and the best way to save money is to find a high-deductible plan that matches your lifestyle. That’s not to mention the countless free or discounted services you can take advantage of. For example, if you’re interested in a mammogram or a colonoscopy, make sure you know if your health insurance policy covers these services.
Medical cost sharing plans
Despite the many differences between health insurance plans, there is one thing that they all have in common: cost-sharing. It is a way for both parties to share a portion of the medical expenses for the year. This is usually in the form of deductibles, copayments, or coinsurance.
Cost-sharing is also an incentive to get patients to use medical care only when they need it. By forcing them to pay their share upfront, insurance companies are able to keep premiums lower. While it is not required, most health plans will include all types of cost-sharing.
One of the most popular options is Medi-Share, which has over one million members. The program has been credited with facilitating the sharing of more than $2 billion in medical bills. Members must make a commitment to share for at least 60 months in order to qualify for membership.
Another popular option is Liberty HealthShare. It has over 202,000 members and its roots date back to the mid-1990s. Unlike traditional insurance companies, the group does not carry reserves. Consequently, it is susceptible to oversharing.
Lastly, Christian Healthcare Ministries is a 501(c)(3) tax-exempt organization. Although it has a small membership, its members have shared more than $2.5 billion in medical expenses.
When choosing a health insurance plan, it is important to understand the difference between cost-sharing and out-of-pocket expenses. Most health plans will incorporate both, but there are a few differences.
For example, most health plans only apply the deductible once a calendar year. However, there are health sharing programs that require the deductible to be applied to both prescriptions and medical care.
If you do decide to enroll in a health sharing program, it’s important to understand what services are covered and what the deductible is. Understanding these details will help you avoid surprises.
Short-term health insurance
Choosing a short-term health insurance plan can be confusing. The terms can be different, and there are many providers to choose from. However, there are some basic requirements to know when shopping for coverage.
Short-term health insurance is meant to cover emergency medical expenses. It’s often used to help pay for a short period of time after a job loss or major life event.
Some plans will allow you to add on preventive care. For example, you can purchase an add-on for vaccinations. There are also plans that cover prescription drugs.
Most short-term health insurance plans include deductibles. A deductible is a set amount you must pay out-of-pocket before the health insurance begins to cover the rest of the costs. You can opt for a higher deductible to help lower your monthly costs.
Short-term health plans can last from 30 days to a year. They offer less coverage than long-term insurance, but they can provide the same level of protection.
In addition, some plans will allow you to get covered for maternity and mental health services. These benefits are not required under the Affordable Care Act (ACA). Nevertheless, they are an essential benefit to have.
You can shop for a short-term plan during the open enrollment period. During this time, you can visit eHealth to browse ACA-compliant plans.
Depending on the plan, you may be required to fill out a medical questionnaire. Some insurers will reject you if you have any pre-existing conditions.
Besides covering emergency expenses, a short-term health insurance plan will also cover hospital room and board. It can also provide a virtual medical aid to help you with prescriptions.
However, short-term health insurance is not a replacement for Medicare or marketplace plans. Instead, it can fill coverage gaps when you’re between jobs or if you’re waiting for Medicare to start.
Tax credit
The health insurance tax credit is one of the many ways the government can help lower the cost of health insurance for millions of Americans. It is on a sliding scale and depends on the size of your household income.
According to the IRS, the health insurance premium tax credit was designed to assist eligible families and individuals buy affordable health insurance. It is phased out at $30,000 for an individual and $60,000 for a family.
Besides the obvious, the tax credit also has the capability to avert some of the administrative overhead that currently goes toward the care of the uninsured. However, if a substantial number of people take advantage of the credit, this may increase the administrative costs of the government in the short run.
Another benefit of the credit is that it encourages the purchase of more inexpensive policies. This might cause a shift in the way consumers use health care. For example, a generous group policy could lead to more use of low value services, a phenomenon known as ‘health care inflation’.
There is no definite proof that the refundable tax credit is the most effective. Some published studies have suggested that it is, but a lack of empirical data prevents definitive conclusions. Nevertheless, a small amount of evidence suggests that it will increase coverage and save the federal government a bundle.
Moreover, the refundable tax credit has little to no effect on the risk profile of consumers. As mentioned before, it can be used to offset the expense of monthly insurance premiums, but it cannot be used to pay for the actual services that an individual receives.
A refundable tax credit is expected to reduce the number of Americans without health insurance by as much as 4 to 22 percent. But it can only do so if it is structured in a way that will encourage the purchase of more affordable policies.
