Business Makeover: Health Insurance Facts
Welcome to TrueNorth Business Consulting presentation of a Business Makeover. Each month will feature an idea that can help your business. True North focuses on helping health and wellness practitioners to maintain and grow their business using the areas of law, marketing, insurance and project management.
Health insurance is a hot topic, as the President tries to press forward on Universal Health Care. Universal health care is healthcare coverage for all eligible residents of a country, which covers medical, dental and mental health. In most countries is it paid for by the public in the form of taxes. The United States does not have this type of system for all its citizens. Medicare gives health insurance benefits, under age 65 with certain disabilities and to those with End-Stage Renal Disease. To understand the topic, there needs to be a discussion of the basics of health insurance.
At least 15% of people in the United States are uninsured. Those that are insured, who are not Medicare participants have one of the three basic types of health plans:
• Health Maintenance Organizations: HMO Plans pay for your coverage in advance, rather than paying for each health-related service separately. For the price of a monthly premium, your HMO will offer you a range of benefits from preventative care to dental or vision coverage. You choose a primary care physician and will need referrals to specialists. You pay a co-payment for each visit.
• Preferred Provider Organizations: PPO Plans negotiate lower overall fee arrangements with an assortment of doctors, hospitals, clinics, and other health providers. Your cost-sharing rate will be lower in-network than out, but you still have the freedom to step out of the network for treatment if you prefer.
• Fee-for-Service Plans (Indemnity): This plan reimburses medical providers for each service received on a case-by-case basis. A Fee-for-Service plan requires payment of an annual deductible before it begins to reimburse the insured for covered services. It also gives family members the freedom choose doctors, hospitals, and clinics.
The problem with these plans is the cost and coverage. The deductibles that need to be met prior to the insurance becoming effective can be high as a cost cutting technique. It is not unheard of for a deductible to $4,000 to $6,000. In an average year most individuals and families will not meet that threshold, therefore paying their medical expenses out of pocket.
The other issue is that most employers do not cover health insurance fully. A percentage is taken out of each paycheck. This lessens the take home pay.
Then there is the 15% that do not have insurance. Prior to Massachusetts making health insurance a requirement, it like New Jersey required the hospitals to take in charity cases. Currently in Massachusetts with some exceptions, individuals who cannot show proof of health insurance coverage that meets the standard of minimum creditable coverage by Dec. 31, 2007, will lose their personal income tax exemption when filing their 2007 income taxes. Failure to meet the individual mandate in 2008 will result in a fine for each month the individual does not have coverage. The fine will equal 50 percent of the least costly available insurance premium that meets the standard for minimum creditable coverage. Other states do not have any system, leaving the uninsured to navigate.
The uninsured can be further broken down by those who are employed, but their employers are not required by state law to provide any health insurance as a benefit; the unemployed; and those that have pre-existing conditions which make them uninsurable.
Universal health care may or may not be the answer. There are multi-level issues, which need a multi-level approach. When looking at this complicated issue, discussions should focus on how to lower healthcare cost, retain quality, lower deductibles and decrease the cost of health insurance.
