Health Insurance Basics
This section copied from my post in another thread. It was intended for someone who doesn't have health coverage through an employer but it translates to choosing between different plans your employer may offer.
There are two kinds of health insurance:
Indemnity - you pay the medical bills, submit your claims, and receive reimbursement for some amount of the claim. These are the most flexible plans because you can go anywhere and see any doctor of your choice but they're the least convenient because you have to manage the claims and front the money (which a lot of people don't have to front for major medical care) and typically the most expensive because the doctors have not agreed to managed care prices.
Managed care (PPO, POS, HMO) - you have a network of participating providers who have agreed to participate with the insurance company and accept their determined rates of what things should cost. As long as you stay in-network, you'll receive the highest coverage level and the providers will submit your claims for you, while all you do is pay your copay or coinsurance amount. HMO normally does not allow you to go out-of-network except in emergencies but POS and PPO may allow you to go out-of-network and receive covered care but you will usually pay more because the insurance will cover a smaller percentage. HMO and POS will require you to have a primary care doctor who coordinates all your care, including all specialists, tests, and procedures; PPO does not require this.
Of the two types, managed care plans are by far more common and more popular. Of the managed types, HMO and PPO are the most popular. HMOs are more affordable (and popular with employers) while PPOs are more flexible by not requiring a primary care doctor and by allowing you to go out-of-network if necessary, albeit at a higher cost to you.
Now, in each of those types, there are different coverage amounts. There are high premium plans that cost a lot each month but cover everything in full or with only small copay amounts. As mentioned in a previous post, there are high deductible plans that require you to pay a determined dollar amount of expenses before the insurance will cover anything; these come with much lower monthly premiums. And there are various levels in between the two. What level you should get depends on what medical expenses you expect to incur, how much you could or could not afford to pay out of pocket for an unexpected illness, and whether your existing doctors (assuming you want to stay with them) participate in managed plans you may be considering.
Personally, for young, healthy people, I love high deductible health plans (HDHP) that meet the Federal requirements for a Health Savings Account (HSA). An HSA is like an FSA (Flexible Spending Account) but so much better. Like an FSA, it allows you to set aside money on a pre-tax basis to be used for qualified medical expenses. It basically is to healthcare what a 401k is to retirement except you don't eventually pay taxes when you use the money. Unlike an FSA, which is use-it-or-lose-it during the plan year, the HSA allows you to roll over the balance to the next year. Also unlike an FSA, you do not have to mail in documentation for every expense; you must keep records of your qualified expenses but only need to prove eligibility in the event of an audit. As long as you can afford the deductible (which by law currently in 2009 is at least $1150/$3300 individual/family), it's a great way to keep your monthly premiums low for a health plan you may never or rarely use and use pre-tax money to pay for the small expenses you do have, which by the way includes dental, vision (including glasses and contacts), and many drug-store expenses (including OTC meds and even condoms).
Even if you aren't exactly 100% healthy and you do have regular medical expenses, the HDHP with HSA may still be a good way to go. I've seen situations where the annual premium total plus the annual deductible on the HDHP is still less than the annual premium total of an HMO or PPO with a lower or no deductible, plus you get the tax benefits of the HSA. However, it may cause a whopper of an expense (the deductible) to you early in the year with smaller expenses (lower premiums) in the following months instead of the higher premiums staying constant over 12 months. You'd have to add up expenses and compare costs of the plans to find out which one works best for your situation.
A good place to compare plans offered in your area from different insurers is http://www.ehealthinsurance.com.
What is group health insurance and what is individual health insurance?
This is simple and somewhat self-explanatory. Group insurance is obtained through a group of people, most commonly in the US through your employer, a union, or a professional organization. Individual insurance is obtained on your own for your benefit plus possibly your spouse and/or children.
The types of insurance (HMO, PPO, etc) are the same regardless of whether you obtain insurance through a group or on your own.
What do I do about my health insurance if I leave my job (for any reason, voluntary or not) where I have group health coverage?
There is a specific law called the Consolidated Omnibus Budget Reconciliation Act (COBRA) that gives you the ability, assuming certain conditions are met, to continue your group health insurance after your termination of employment for a period of up to 18 months. This applies even if you leave your job voluntarily. You will be responsible for paying up to 102% of the full cost of the insurance (this includes a small administrative fee). Note that if your employer previously subsidized the cost of the insurance, the full cost may be significantly more than you are used to paying. Although COBRA may be expensive, it is an easy way to make sure your health insurance needs are covered while you look for another job or while you're waiting for your eligibility for health insurance to begin at your new job. It is virtually a MUST HAVE for anyone with pre-existing conditions. If you reach the end of the 18-month period and your COBRA expires, you may be eligible for a guaranteed issue plan under HIPAA but these are usually even more expensive.
As I said, COBRA can be expensive so you may want to look around for other options in the individual insurance market. If you need time to research your options, you could always choose COBRA for the first month or two and then cancel it after you have a different plan in place. You really should not cancel an old plan or forgo COBRA before your new coverage takes effect because the day after your coverage ends and you have no insurance coverage is exactly the day when life will give you a big middle finger in the form of a medical emergency.
Again, you can compare individual health insurance options at http://www.ehealthinsurance.com. Whether you buy through them or not, at least you can quickly and easily see options side by side.
I was laid off in 2008 or 2009. What does the 2009 Stimulus Bill mean to me regarding my COBRA insurance?
If you were involuntarily terminated (laid-off, etc) after September 1, 2008 and before December 31, 2009, you may be eligible for a government subsidy of your COBRA insurance premiums. There are income limitations. If you qualify, the government will pay 65% of your premium for up to 9 months. You will be responsible for the other 35%. Also, if you initially declined COBRA due to the cost, you may be eligible to elect it now even though the original election period has passed. Furthermore, you normally may only continue under COBRA whatever health plan you had at the time you were laid off. The stimulus bill may also provide you with the option to switch to a different option offered by your former employer if it has a lower premium than your current plan.
Although COBRA is available to you if you quit your job voluntarily, the premium subsidy is only for those who were involuntarily terminated.
Your eligibility for the subsidy may end sooner than 9 months under several circumstances, including if you become eligible for Medicare or another group health plan.
If you qualify for any of these benefits, you should have been or should be notified by your former employer or Plan Administrator. If you think you may qualify and have not been notified, please contact your former employer's HR dept or your Plan Administrator.