| Finding an individual health insurance policy | | | | the last twelve months. When buying |
| that's right for you is no easy task. Here | | | | individual insurance, however, the insurance |
| are five questions that will point your | | | | company can place a waiting period on |
| search in the right direction. | | | | coverage related to the condition, or it can |
| | | | decline to cover you outright. Five |
| Whatever else might be said about individual | | | | states-Massachusetts, Maine, New Jersey, New |
| health insurance, it is not easy to buy. You | | | | York and Vermont-require insurance companies |
| have to decide between companies, plans, | | | | to make health insurance available to all |
| deductibles. The choices are bewildering. | | | | people regardless of their health (guaranteed |
| Here are five questions to make the process | | | | issue). Some other states offer high-risk |
| simpler: | | | | individuals the opportunity to participate in |
| | | | insurance pools that provide coverage to |
| 1. What can you afford? Insurance companies | | | | people who have been denied insurance based |
| want you to make all your other choices | | | | on pre-existing conditions. |
| first, and then consider cost, but it has to | | | | |
| be the other way around. Health insurance | | | | 4. Do you take prescription drugs? If so, you |
| should not put you into debt. To control | | | | will want to compare the drug benefits of the |
| costs, you can select a plan with a higher | | | | different plans. Some plans require you to |
| deductible-the amount you have to pay before | | | | meet the annual deductible before covering |
| the insurance takes over-higher co-payments, | | | | prescription drugs. Other plans do not |
| or fewer benefits. Make sure the risks you | | | | require a deductible for medication. Most |
| assume are limited, however. For example, | | | | plans require you to pay part of the drug |
| agreeing to pay $2,000 in deductibles is a | | | | cost, known as a co-payment, or co-pay. The |
| limited risk; it cannot exceed $2000. | | | | amounts of the co-pay can vary widely from |
| Accepting a limit on hospitalization and | | | | plan to plan. Some plans place annual limits |
| outpatient care is an unlimited risk, because | | | | on their drug benefits; others do not. Most |
| the costs resulting from a serious illness or | | | | plans adjust the co-pay amounts, depending on |
| accident could far exceed insurance company's | | | | whether you use generic drugs, brand-name |
| limits. | | | | drugs that are preferred by the plan, and |
| | | | name brand drugs that are not preferred. |
| 2. Do you want to keep your doctor? If you | | | | |
| have a doctor and/or a specialist you want to | | | | 5. Can you use a tax break? Health insurance |
| continue seeing, your choice of plans may be | | | | premiums are not tax deductible, but the |
| limited. With a managed care plan such as an | | | | money you spend to meet your deductible can |
| HMO (Health Maintenance Organization), PPO | | | | be sheltered not only from income taxes, but |
| (Preferred Provider Organization), POS (Point | | | | also from Federal Insurance Contributions Act |
| of Service), or IPA (Individual Practice | | | | (FICA) tax. You can deposit up to $2,850 for |
| Association), your doctor would have to be | | | | an individual and up to $5,650 for a family |
| part of the network. If he or she is not in | | | | per year into a tax-free federal Health |
| any network, you would have to consider an | | | | Savings Account (HSA). Since contributions to |
| indemnity plan, sometimes called a | | | | an HSA are exempt from withholding taxes (as |
| "fee-for-service" plan. This type of plan | | | | high as 9.3% for state income tax, 28% for |
| allows you to go to any doctor, hospital, and | | | | federal income tax, 7.65% for FICA tax), HSA |
| specialist, but it has a high annual | | | | dollars have up to 44.95% more buying power |
| deductible. After the deductible is met, the | | | | than after-tax dollars do. Medication that |
| individual health insurance plan will pay | | | | would cost $1000 in after-tax dollars could |
| about 80 percent of the bill. You are | | | | cost as little as $550.50 in HSA dollars. HSA |
| responsible for the other 20 percent. In | | | | contributions roll over from year to year, |
| addition, indemnity plans set "usual and | | | | and the funds remain untaxed as long as they |
| customary" rates for treatment. If your | | | | are used for medical expenses or are |
| doctor charges more than the usual and | | | | withdrawn for any purpose after age 65. HSA |
| customary rate, you pay the difference. | | | | funds can be invested, and the earnings are |
| | | | tax-deferred. To open an HSA, a person must |
| 3. What medical conditions do you have? If | | | | enroll in a High Deductible Health Plan |
| you have a chronic medical condition such as | | | | (HDHP). An HDHP requires a minimum deductible |
| asthma or diabetes, you will want to compare | | | | of $1,100 for an individual and $2,200 for a |
| coverage to see how the insurance company | | | | family. The high deductible keeps the monthly |
| will handle your condition. If your condition | | | | premiums low. The lower monthly costs and the |
| has been diagnosed or treated before joining | | | | tax-sheltered out-of-pocket expenses combine |
| a new plan, it will be considered | | | | to make an HDHP plan the best option for many |
| "pre-existing." Under the Health Insurance | | | | people. |
| Portability and Accountability Act (HIPAA), a | | | | |
| pre-existing condition must be covered | | | | By asking these five questions, you will be |
| without a waiting period when you join group | | | | able to narrow down your choices, making the |
| plan, provided you have been insured during | | | | selection of a plan much simpler. |