Tag Archives: health insurance

The Ins and Outs of Health Insurance

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Health insurance is complicated and confusing.  It’s one of those things that you rarely think about until you need it.  But when you need it…you had better be prepared.  Best case scenario:  you need it, you have it, and it covers everything flawlessly.  Worst case scenario:  you need it and you don’t have it, and you end up with a tremendous debt.  Typical scenario:  you need it, you have it, and you learn surprising lessons about how much you still need to pay out of pocket.

There are four basic ways that you have to pay when it comes to your healthcare:

  1. You pay the premium on your health insurance policy.
  2. You likely pay a co-payment (usually $20 or $30 on typical doctor’s office visits) on office visits and prescriptions.
  3. If you have to have medical procedures done, you likely have to pay an annual deductible amount before your insurance starts covering things.
  4. After your deductible is met, your insurance likely still will not pay the full remaining bill.  They will pay a certain percentage (80% is a good example) and you are responsible for the remainder.  This remainder that you need to pay is called co-insurance.

Thankfully, there is one more health insurance term you should know about, which may be your saving grace in the case of a catastrophic illness.  Once you have reached the annual maximum designated by your insurance policy (note:  not all policies will offer an annual maximum), you will not have to pay any more out of pocket for co-insurance for the rest of that calendar year.  (You will still need to continue to pay co-payments, however.)

So, for example, assume you have a surgery done that costs $50,000.  You have a deductible of $500 and your co-insurance is 20% (the insurance pays the remaining 80%), and your annual maximum is $2,000.  For this surgery, you will have to pay the first $500.  The insurance will pay 80% of the remaining $49,500, or $39,600.  At first glance it looks like you will need to pick up the remaining $9,900.  Thankfully, your out-of-pocket annual maximum is $2,000, so you only need to pay a total of $2,500 ($500 deductible plus the $2,000 annual maximum on the co-insurance) for this adventure in medical care.  But if you had that $50,000 surgery without having health insurance, your out of pocket expense would be quite painful!

Tomorrow is the last day that you can purchase the Penn State Student Health Insurance Plan for fall semester.  Health insurance is expensive.  But trying to live without it can be even more expensive.

The Time to Buy is Now

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I hate dealing with health insurance issues.  Everything seems so confusing.  Beyond the premiums, you have to deal with deductibles, co-pays, co-insurance, and networks.  It feels like the whole system is stacked against the little guy.  But there is one thing that is much worse than dealing with health insurance—not having health insurance.  Modern medicine is amazing.  And amazingly expensive.  So if you go without insurance you are taking a giant risk.  One bicycle accident or unhappy appendix can put you many thousands of dollars in the hole.

Because many students don’t have health insurance from another source, Penn State offers a student health insurance plan that provides great coverage.  The enrollment period stays open until September 3, so you still have a week to get signed up if you need insurance.  It’s not cheap.  Few things that are actually good are also cheap.  But we do have the flexibility to increase federal student loan eligibility to cover the cost of this important purchase.  You just need to stop by the Law School’s Financial Aid Office (in suite 105) or send me an email (sab36@psu.edu) and I’ll help you through the process.

The right time to buy health insurance is right now.  The wrong time to buy health insurance is when it’s too late and you need it.

Buy It! And Hope You Never Use It!

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What is the one thing that you should always buy with hopes of never using it?  It’s not that embarrassing pair of skinny jeans in the back of your closet.  It’s not the platform pumps that you grabbed on clearance and never wore.  It’s insurance.  Health insurance.  Car insurance.  Renter’s insurance.  All of it is important.  And you hope and pray that you never need to use it.  But if you ever do need it, you’ll be amazingly grateful that you have it.

Today I’m going to focus on health insurance.  I have a really good health insurance plan through Penn State.  I pay extra for the option of a lower deductible plan.  And I’ve never been so grateful for it as I was at the start of August.  One fateful night at the start of August I started experiencing stomach pain.  At first I thought it must have been something I ate, but my husband and I had eaten the same thing for dinner and he had no ill effect.  A couple hours later I found myself in the emergency room, and then spent the next few days in the hospital correcting the issue that had caused my great pain.  And recently I got a hospital bill for just over $1,000 for that ER visit and hospital stay (due to my deductible and co-insurance responsibility).  And that sounds like an awful lot of money.  Until I think about what that bill would have been without insurance.  Without the health insurance my bill would have been over $19,000.  Nineteen thousand dollars!!!!  I can’t even comprehend the financial mess I would be in if I had to come up with that kind of money for four unpleasant days at the hospital!

health insurance

If you don’t have health insurance…now is the time to act.  Penn State students are eligible to purchase this platinum plan offered through Aetna.  The deadline to purchase for fall semester is Tuesday, September 6.  Worried that you can’t afford it?  Stop by the financial aid office.  It is possible to increase your student loan eligibility to allow for the cost of purchasing insurance.

No one ever likes to think about spending money for an insurance plan they may or may not ever use.  But the cost of not having it could be much, much greater.

Selecting a Health Insurance Plan

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health-insurance

I’ve written about why having health insurance is important.  I’ve written about how health insurance works.  But with the Affordable Care Act (ACA) enrollment period open, it seemed like I should write about how to sort through the many insurance options and to select one that works for you.

Health insurance now comes in metallically labeled levels of coverage.  Bronze plans pay about 60% of expenses on average.  Silver pays at about 70%.  Gold pays at about 80%.  Platinum pays at about 90%.  And there are also Catastrophic plans that pay less than 60% of average expenses, but these are only available to people under 30 or people with a demonstrated hardship.  Frankly, I would avoid the Catastrophic plans if at all possible.  Insurance is one of those things that you pay for hoping that you never ever need to use it.  But when you do need to use it (and with health insurance, that’s often a surprise event), you want it to actually pay for some things.

If you expect to make regular doctor visits or take prescription drugs regularly, you’ll likely want a Gold or Platinum plan.  These cost more per month, but they come with a lower deductible and lower co-insurance.  More out of pocket to buy the insurance, but less out of pocket to use it.

If you are healthy and don’t expect to have many medical expenditures, a Silver or Bronze plan may work better for you.  These have lower up-front costs, but come with higher deductibles and higher co-insurance.  These work well for the healthy and the wealthy.  And they definitely work best when paired with a health savings account.

Penn State offers employees the choice of a Platinum plan and an alternate high deductible plan (which I think is Bronze, but I’m not positive).  As a middle-aged woman with several health issues requiring prescription medication and follow-up physician visits, I’ve opted for the Platinum plan.  I have to pay a lot more per month for my coverage, but in the long run it makes the most financial sense for me, as I pay less out of pocket per year overall.  This year I ended up having three unexpected minor surgeries on my hands, and I was very grateful for the Platinum coverage.  My out of pocket expense with the high deductible plan would have been several thousand dollars as opposed to the several hundred I paid with my Platinum coverage.

Penn State students also have the opportunity to purchase a Platinum plan at a group rate from Aetna.  This student insurance option costs $2,838 per year, or $236.50 per month.  If I were an uninsured student with any health issues, I would choose this option without hesitation.  It’s less expensive than most Platinum plans on the ACA Marketplace and the coverage is great.  But if I were a healthy student needing coverage, I might think about saving money by choosing a Bronze or Silver plan from the ACA Marketplace.

The answer of which plan is best will absolutely vary from person to person.  How often do you go to the doctor?  What medications do you require?  Do you have any pre-existing conditions?  Do you expect you’ll need any surgeries?  How much money do you have available month-to-month for your premiums?  How much money do you have available to cover your deductible and co-insurance?  These are all things you’ll need to take into consideration in selecting your health insurance plan.  It’s not easy.  But it is truly important!

Health Insurance: Have you bought yours yet?

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health care

Health insurance has been a hot topic of conversation in the news for over a year now.  The Affordable Care Act has been enacted in full with the start of this calendar year.  Now we are all required to have health insurance or pay a penalty for not doing so.

If you have insurance through your employer, your spouse or your parents, you are all set.  Or perhaps you bought a policy in the fall that covers you for the full year.  If not, you have some decisions to make in the VERY near future.  You have a few options available to you:

You can purchase the Penn State student health insurance policy offered through Aetna.  The deadline to purchase this policy for the spring semester is January 22 (that’s WEDNESDAY!!!).

  1. You can purchase insurance through the Affordable Care Act insurance exchanges.  Through this venue, you may qualify for a tax credit that reduces your total cost, so it may actually be cheaper than the student policy (but it might not).
  2. You can do your own research and buy a private health insurance policy.
  3. You can tempt fate, pay a penalty of 1% of your income or $95, whichever is greater (up to a maximum of $285), and hope and pray that you don’t end up sick or injured.

Now let’s talk a bit more about why you should NOT choose option #3.  You should always approach health insurance assuming that you are going to experience a major illness or injury.  If you are diagnosed with cancer, will you be able to afford treatment?  If you are in a serious bicycle accident and need surgery on your arm, will you be able to pay for that?  The answer is easy.  Unless you are independently wealthy, you definitely need to have health insurance.  Otherwise, you could ruin your financial future with a huge medical debt that will haunt you for decades.

So now that we’ve established the importance of having insurance, how do you select the right policy?  There are a lot of things to consider.  What is the cost of the premium?  How much are co-payments?  How much is the deductible?  How much is your co-insurance responsibility?  How high is your out-of-pocket maximum?  Always assume you’re going to have a major illness or injury…then select the policy that gives you the best combination of these elements for your budget.  If all this jargon has left you scratching your head, take a look at this classic Moneywise Tip for a quick primer.

If you know you need to buy health insurance but are baffled as to how to pay for it, talk to your Financial Aid Director.  She can help you build it into your financial aid budget.

 

How Health Insurance Works (a classic tip from 2/25/2013)

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Health insurance is complicated and confusing.  It’s one of those things that you rarely think about until you need it.  But when you need it…you had better be prepared.  Best case scenario:  you need it, you have it, and it covers everything flawlessly.  Worst case scenario:  you need it and you don’t have it, and you end up with a tremendous debt.  Typical scenario:  you need it, you have it, and you learn surprising lessons about how much you still need to pay out of pocket.

There are four basic ways that you have to pay when it comes to your healthcare:

  1. You pay the premium on your health insurance policy.
  2. You likely pay a co-payment (usually $10 or $20 on typical doctor’s office visits) on office visits and prescriptions.
  3. If you have to have medical procedures done you likely have to pay an annual deductible amount before your insurance starts covering things.
  4. After your deductible is met, your insurance likely still will not pay the full remaining bill.  They will pay a certain percentage (80% is a good example) and you are responsible for the remainder.  This remainder that you have to pay is called co-insurance.

Thankfully, there is one more health insurance term you should know about, which may be your saving grace in the case of a catastrophic illness.  Once you have reached the annual maximum designated by your insurance policy (note:  not all policies will offer an annual maximum), you will not have to pay any more out of pocket for co-insurance for the rest of that calendar year.  (You will still need to continue to pay co-payments, however.)

So, for example, assume you have a surgery done that costs $50,000.  You have a deductible of $500 and your co-insurance is 20% (the insurance pays the remaining 80%), and your annual maximum is $2,000.  For this surgery, you will have to pay the first $500.  The insurance will pay 80% of the remaining $49,500, or $39,600.  At first glance it looks like you will need to pick up the remaining $9,900.  Thankfully, your out-of-pocket annual maximum is $2,000, so you only need to pay a total of $2,500 ($500 deductible plus the $2,000 annual maximum on the co-insurance) for this adventure in medical care.

Have you looked at your health insurance policy?  Do you know how much your co-payments, deductible, co-insurance, and annual out-of-pocket maximum are?  If not, you should take a look.  This is better to know in advance rather than scrambling to find out when you are face to face with a medical emergency.