Why do we need health Insurance? Health insurance really doesn’t insure good health, does it? While it can’t guarantee your physical health, health insurance can help protect your financial well being by providing a financial safety net in the event of unexpected illness or injury. Health related expenses may easily run into the tens or even hundreds of thousands of dollars for a serious illness or injury.
Here is a three-step strategy to help you save time and money when shopping for health insurance:
Step 1: Do You Need Individual or Group Health Insurance Coverage?
Individual plans are very popular with anyone who has to buy their own health insurance, as well as healthier self employed and small business people and their families. These plans often have substantially lower premiums than small group plans and because individual plans are medically underwritten, it’s important to get this coverage in place while you’re relatively healthy. Once you are covered, virtually all individual plans are non-cancelable and guaranteed renewable until you are eligible for Medicare at age 65, provided that you continue to pay your premiums and live in the service area.
Most individual plans also provide on the job health insurance coverage for the self-employed. However, you should always make sure that you meet the requirements for on the job coverage, as eligibility requirements vary–depending upon whether or not you are a sole proprietor, or if your business is a LLC, Sub-S Corporation or other business type. Health insurance premiums for the self-employed are 100% tax deductible, but you’ll need to verify eligibility for this deduction with your accountant.
Small business owners may qualify for a special “Group of One” designation in individual plans. There is typically no difference in premium cost between a Group of One individual plan and standard individual health insurance plan, but you still must medically qualify. The principal advantage for self identifying as a Group of One in an individual plan is that the small business person’s business can pay the insurance premium.
For qualified small business owners with serious pre-existing conditions there is also a group health insurance coverage option known as a “Group of One”. These guaranteed issue plans are typically fairly expensive since most people enroll in these plans because their health conditions will not allow them to qualify for less expensive individual policies.
Individuals with serious pre-existing conditions may also be eligible for guaranteed issue coverage from CoverColorado. Because this is a high risk pool their premiums are typically about 35% more expensive. CoverColorado does not provide coverage for on the job injuries or illnesses and premiums must be paid with personal funds.
If your company has 2 to 50 employees the employer can set up a small group health insurance plan. Small group health plans have no medical underwriting, so they are particularly attractive to groups that include people with serious health problems that would make them unable to qualify for less expensive individual coverage.
Group health insurance is the only available option if the employer wants to pay for any portion of their employees’ health insurance premiums. Employers are typically required to pay at least 50% of their employees’ premiums and commit to a certain level of employee participation in the plan. Groups of more than 50 employees have a unique set of rules and are considered part of the large group market.
If you have not had health insurance coverage or have had a break in health insurance coverage you may be subject to a pre-existing conditions clause. These typically range from 6-12 months and cover conditions you were treated for in the 12 months directly preceding your new policy’s coverage. However, individual and small group insurers in Colorado must give you credit for prior continuous coverage. Coverage counts as continuous if it is not interrupted by a break of 60 to 90 or more consecutive days. However, prior coverage is not credited against any exclusionary riders in an individual policy.
Step 2: Do You Want a Copay plan or a Major Medical/HSA plan?
Rising drug and health care costs have driven up health insurance premiums, increasing the need for consumers to be savvy about their options and choices.
However, there are still some good values to be found on feature-rich plans with copays for doctor visits and prescriptions, particularly if you are willing to consider plans with deductibles of $500 or more. These “copay plans” are very popular and often provide many immediate benefits to offset day-to-day health related costs. Alternatively, many Coloradans are increasingly interested in self-insuring for the “little” things and getting a relatively inexpensive major medical or catastrophic plan to protect them in the event of serious health problem.
HSA (Health Savings Account) qualified plans are special major medical health insurance plans that can be particularly well suited to healthier small business people. Families can often save thousands of dollars each year in reduced insurance premiums with a higher deductible HSA qualified major medical insurance plan as compared to a traditional copay plan, often while reducing their families’ aggregate deductible and coinsurance risk.
Here’s how it works: You must first have a relatively inexpensive HSA qualified major medical health insurance plan to be eligible to open a Health Savings Account. Money saved from the reduced insurance premiums can be used to help fund a Health Savings Account and your contributions to the HSA are 100% tax deductible. Money from the HSA can be used to pay for any qualified medical related expenses, including doctor visits, prescription drugs, paying other expenses toward your deductible, as well as dental and vision care.
Because any money you don’t spend is yours to keep and grows from one year to the next, HSA’s offer a long-term savings advantage. If you’re relatively healthy during your working years, by the time you retire, you could build a sizable tax advantaged nest egg. HSA plans are not for everyone, but for most people they are worth taking a look at. We suggest comparing the premium and benefits of the most attractive copay plan with the most attractive HSA plan and then running a few “what if” scenarios to determine which plan best suits you.
Step 3: Do You Want to Spend Days or Minutes Shopping for Health Insurance?
Even in today’s competitive marketplace health insurance premiums for similar plan designs can vary significantly from company to company based upon age, gender, tobacco use, health and location. It pays to comparison shop! Here are some time saving short cuts that can help you save both time and money.
Individual health insurance premiums are filed with and regulated by the Colorado Division of Insurance. That means that whether you get your health insurance through a broker, an agent or directly from the health insurance company, you’ll pay the exact same monthly premium for the same plan regardless of from whom you buy your coverage.
Knowing this, you can save a huge amount of time and energy by working with a broker and having them do all the time consuming research for you. This service is typically completely free to you. Ideally, you should find an experienced and reputable broker that specializes in health insurance and works with 6 or more different leading companies. Don’t be shy about asking them to list what companies they represent, and whether or not they specialize in small group or individual plans and if they are based in Colorado or out of state.
A good broker will research the various plan options from different companies and send back the results of their analysis for you to review at your convenience. They can also answer all your questions and help you find the plan with the benefits you want at a premium you are comfortable with, and then help you through the application process.
Be Careful Out There…
If you come across a “health benefit” plan that seems particularly inexpensive or one that boasts that it will insure everyone regardless or health or risk, be cautious. Some health discount plans mislead consumers into thinking they are buying low-cost health insurance. Discount plans are not health insurance, and consumers are often shocked after having a claim to find out that they are responsible for the entire medical bill.
A final word of advice: don’t wait! The best time to save on health insurance is shop for coverage when you’re healthy. If you have an injury or your health deteriorates, you may find that your options are more limited and costly.
*Best Price Guarantee: Health insurance premiums are filed with and regulated by the Colorado Division of Insurance. If you get your health insurance through Colorado Health Insurance Brokers, through another agent/broker or directly from the health insurance company, you’ll pay the same monthly premium for the same plan. Enjoy the convenience, advantages and personal service of getting a health insurance plan through Colorado Health Insurance Brokers and rest assured that you’re getting the best available price.