Is a insurance premium became a burden to u?
A GUIDE TO HEALTH INSURANCE AND PRESCRIPTION DRUGS:
A Safety Net for Elderly Pitfalls
by Jacob Clark and Ryland Deinert
This article will cover many facets in health insurance and prescription drugs that the elderly will face when buying and relying on plans for protection both physically and financially. The areas to be covered consist of (1) understanding your needs, (2) the available health plans, (3) common pitfalls, (4) regulation of health plans, and (5) what you need to know about prescriptions drugs. This guide is not the bible on health insurance plans and prescription drugs but rather a friendly guide full of suggestions, information, and problems regarding these issues. We hope it is helpful and wish you the best of luck in obtaining a plan that fits your present and future needs.
Understanding What You Need
The basic and most important question you should ask yourself is, “why do I need insurance?” To understand this you should know what is meant by the word insurance. “Insurance is a contract whereby one undertakes to indemnify another or to pay or to provide a specific or determinable amount or benefit upon determinable contingencies.”[1] In other words insurance provides protection. First, it allows the purchaser to protect themselves from liability, loss, or damage. It also allows the purchaser to provide for themselves under certain policies.
For our purposes this section we will mainly focus on benefits the purchaser expects to receive. Now that you have an understanding of insurance the next question is why do you need it? Simple, when you attain retirement age health insurance will no longer be paid for in full or in part by an employer, assuming you retire.[2] You will be come the sole provider for your own coverage, unless you qualify for Medicaid and/or Medicare.
First, let’s ask ourselves some basic questions to see if we need health insurance:
1) What illnesses, diseases, or ailments have I had or currently have?
2) What is my current state of health?
3) Do I work out 3 or more times a week?
4) Do I eat healthy?
5) What common health problems would my family history reveal?
6) What common health problems do my friends have?
Now that we have the answers to those questions there should be little doubt as to whether or not you need health insurance. If there is still any doubt let us consider the premiums versus the medical costs. A monthly premium could run anywhere from $50.00-$800.00 a month.[3] Now that is a little scary, but remember the higher number is based on serious health problems that you currently have or have had. Hopefully these figures have not sent you into a cardiac arrest on the spot. Now consider the numbers the hospitals and doctors will charge you:
3 day stay in the hospital for bacterial pneumonia (common health problem for the elderly) = $5000.00+.
MRI = $800.00-1400.00.
X-ray (broken bones are very common and you often get more than one) = $200.00+.
Doctor’s visit = $50.00+. (This does not include what the doctor will prescribe or test you for).
Shots = $15.00+.
IV = $200-400.00
These are just a few of the reasons you might want to have health insurance. One doctor’s visit could easily eat up a years worth of premiums.
Next, let us assume you plan to retire at the age of 62 and at the same time you apply for early social security benefits.[4] You will not qualify for Medicare because you are not 65 years of age and on social security (or on Railroad Retirement benefits). However, if you are disabled and on social security then you may qualify for benefits.[5] Medicaid might be an avenue to pursue depending if you are financially challenged. Medicaid bases your qualification on how your financial situation compares to the poverty level.
Looking beyond these government programs your options are many. There are two types of plans, individual and group. To let you know ahead of time individual health plans tend to have much higher premiums. The reason that individual plans are more expensive is based on the sharing of risks. Insurance companies base your premiums on the risks you present versus the amount they can collect as premiums and make a profit off of. Individual plans consider your health only when writing a policy, contrary to group plans. No one other than the insurance company is sharing the risk (a second insurance company may underwrite the first insurance companies policy, thus sharing the risk between the companies) that one day you will need medical care. An actuary[6] (a fancy insurance word for mathematician) will take studies of people in similar stages of life and that have similar health status. Actuaries use that percentage along with other personal information you have provided to evaluate whether the amount of risk you create for the insurance company will be small or great. From this assessment your premiums are calculated.
Group plans on the other hand use a different process. The insurance company places you in a plan with other similar situated people wherein you will share the risk amongst each other. This is going to be a less expensive plan for you because of the sharing but it can also be more cumbersome regarding the limits and exclusions in coverage. To better explain risk sharing in a group plan lets look at it in a simpler light using the following scenario. Every Monday a restaurant has a special offer where you can buy one dinner for yourself and additional dinners for your friends at half-off (limit a of 10 persons per ticket). An individual plan would be like going to the restaurant and eating by yourself at the price of $7.50. A group plan would be like taking nine additional friends to dinner and of course share the cost. The total cost is $41.25 between the ten of you but your share is $4.12. This is, in essence, risk sharing in the insurance world of group and individual health plans. Again, I would like to remind you that individual plans are much more expensive, although there are many more advantages to having an individual plan instead of a group plan. Your needs and financial situation will likely dictate what type of plan you will need.
Read more http://www.usd.edu/elderlaw/student_papers_f2003/a_guide_to_health_insurance_and.htm
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