What is a Family Out of Pocket Maximum in a Health Insurance Plan?

When purchasing health insurance for the first time, there is much to learn about how a medical plan functions.  If you are responsible for the insurance of your family, one of the things you will want to understand is what is meant by an out of pocket maximum, specifically a family out of pocket maximum.

Fundamentals of Insurance

To get an idea of how a family out of pocket maximum works in a health insurance plan, you must understand this one basic principle of insurance: instead of a policyholder assuming the risk of financial loss due to an unforeseen event, that person can pay a price (called a premium) to an insurance company, and the insurance company will accept some of the risk of the loss.  The greater the risk of loss for the insurance company, the greater the premium.

The easiest way to lower the premium is to take on more risk of the loss for yourself.  A typical method employed to do this is to increase a policy’s out of pocket maximum.

So What is a Family Out of Pocket Maximum?

An out of pocket maximum is exactly what it sounds like.  It is the maximum amount of money that you are required to pay out of pocket for medical expenses during the year.  In the past, it was up to the medical plan to determine what all was included in the out of pocket maximum, but under the Patient Protection and Affordable Care Act (PPACA), commonly referred to as Obamacare, all expenses (deductible, coinsurance, copays) will count towards the out of pocket maximum.

The family out of pocket maximum is the maximum amount that an entire family unit on a health insurance plan will be responsible for.  This can be just two people (spouses, an adult plus one child, etc.) or up to as many people are in the family unit.  An individual out of pocket maximum is the most that one person will be responsible for.

So lets say that a policy’s individual out of pocket maximum is $1,000, and the family out of pocket maximum is $3,000.  If a family has a mom, dad, and 3 kids, then the most they all will pay together is $3,000.  If mom pays $800, dad pays $500, kid 1 pays $900, kid 2 pays $400, then the four of them together total $2,600.  That means that the family will only be responsible for $400 of medical expenses for kid 3.  Even if kid 3 gets extremely sick and is in the hospital for 3 weeks, the family will only pay $400.  The insurance plan will pick up the rest.

Does Everything Count Toward an Out of Pocket Maximum?

As mentioned above, PPACA requires all out of pocket expenses paid to medical service providers count toward the out of pocket maximum.

One thing that is not counted toward the out of pocket maximum is the premium paid to purchase the medical insurance plan, except for Medicaid and CHIP premiums.

How Can I Find Out More About the Family Out of Pocket Maximum?

Make sure to carefully read the benefit summary of an insurance plan you are considering subscribing to.  The Affordable Care Act requires medical insurance companies and group plans to provide a Summary of Benefits and Coverage (SBC) for all plans.

SBCs are required to succinctly display the benefits that a health insurance plan provides.  The language should be easy to read, and an SBC makes it easier to compare benefits between multiple plans on an apples-to-apples basis.

How Do I Know What Out of Pocket Maximum is Right for My Family?

That really depends on the amount of risk you are willing to take.  A low out of pocket maximum will require more money paid in premium.  A high out of pocket maximum means lower premiums.  If you do not want to take the chance of paying a lot of money out of pocket if your family needs medical services, then you’ll want a lower out of pocket maximum.  Just know that you’ll be paying more in premium.

To find the current family out of pocket maximum, visit the IRS website.

Are You Getting The Best Deal With Your Family Out of Pocket Maximum?

The last thing any of us want to do is find out we’re paying too much for a family out of pocket maximum that is way too high. Does that sound like you?

Fortunately, we have access to hundreds of plans and can narrow your choices down to the ones that make the most sense for your family.

All you have to do is visit this link  —->>>> Affordable health insurance

Once there you can find the best insurance plans at the best prices available.

 

Read More

What Health Insurance Quotes Should a Young Person Expect?

When you are new to the health insurance world, you might not know what to expect in the way of health insurance quotes.  The rates vary from one company to the next and from one plan to the next.  While it is impossible to know exactly where your specific insurance quote will be priced, there are ways to know the ballpark that you will be in.

How Has PPACA Affected Insurance Quotes?

When the Patient Protection and Affordable Care Act (PPACA), also known as Obamacare, was passed, the law established health insurance exchanges.  These exchanges are online marketplaces where individuals can easily comparison shop for plans and premiums to find the right medical insurance for them.  The idea is that these exchanges will bring about competition amongst health insurers.  While that may or may not be the case (health insurers already were in competition with each other), with prices displayed right next to each other, it stands to reason that increased competition will bring down premiums.

PPACA also established the Minimum Loss Ratio (MLR).  Health insurance companies are now required to pay out in claims at least 80% of the premiums they collect.  The other 20% goes to administrative costs, fees, taxes, profit, etc.  If the MLR is below 80%, the insurance company must pay a rebate to its subscribers.  The 80% MLR rule has kept premiums lower than they would have been otherwise.

PPACA also requires large renewal increases to be approved by the government.  This keeps insurance quotes from skyrocketing faster than needed.

Insurance Quotes are Affected by Age

As you might expect, a medical insurance premium is dependent upon the age of the applicant.  In general, older people require more medical services than young people.  Of course that isn’t always the case (some 80 year olds are in perfect health while 25 year olds have chronic conditions), but insurance risk tables are based on large populations.  Because older people have more claims, they must pay larger premiums.  Since young people typically have less claims, their premiums are lower.

However, the spread between the lowest age-banded premium and highest age-banded premium is not as large as it used to be.  PPACA sets a limit on how much more the highest age-based premium can be compared to the lowest age-based premium.  Because of this, it is expected that the insurance quotes that young people receive will be higher than usual since they will be subsidizing the cost of the health care for the older population.

Insurance Quotes are Affected by Plan Design

The plan design that you choose (deductible, coinsurance, copays, etc.) has a direct relationship to the insurance quote that you receive.  If you take on more out of pocket responsibility, you will receive a quote that is lower than if you choose a plan will less out of pocket responsibility.  It all depends on if you are willing to take a chance on not having a large medical claim.

The best way to find out what your insurance quotes will be is to just go and fill out an application.  It does not bind you to anything and doesn’t take too much time.  Once you do that, you will get some quotes and be on your way towards covering your health care needs.

Read More

Low Income Health Insurance Options Available to Young People

It is very rare for a young person to begin life after high school or college with an enormous bankroll.  As you step out on your own and start down the path to a successful career, there is a good chance you’ll start at the bottom of the salary scale.  But that doesn’t mean that you cannot find a good medical insurance plan that fits your lifestyle and budget while giving you the ability to cover the costs of your healthcare needs.  When you go out to look for plans to sign up with, check out these low income health insurance options.

Health Insurance Exchanges are Great for Those with Low Incomes

The Patient Protection and Affordable Care Act (PPACA), or as many people know it, Obamacare, created health insurance exchanges, which are online marketplaces that allow people to go on the Internet to purchase health insurance.  Available insurance plans will be easily accessible on the exchanges, and the premiums are easy to determine.

In addition, when you buy health insurance through the exchanges you might qualify for subsidies to help offset the cost of the monthly premiums and out of pocket expenses.  Eligibility for these subsidies can quickly be determined online when the insurance plan is bought.  And the lower your income, the greater the financial assistance.

The online marketplaces are run by each state, so the same insurance options will not be available in every state.  Insurers are not required to participate in each state.

Medicaid

Medicaid is possibly another low income health insurance option.  Medicaid provides health benefits at a very low cost.  Like the exchanges, Medicaid is administered by each state, so check out your state’s Medicaid program for eligibility.  Not all states have the same Medicaid access.

Children’s Health Insurance Program (CHIP)

If you make too much money to qualify for Medicaid, but you still need financial assistance to cover your children with health insurance, you should look into CHIP.  CHIP is a low income health insurance option that can provide your kids with quality healthcare at little or no cost.

Like the other two options listed above, CHIP is run by the states, and in most cases is administered very closely with Medicaid.

Check the Health Insurance Plan at Work

If your employer offers you health insurance, you should seriously take a look at the plan designs available and the cost of each.  PPACA sets a limit on how high employers can set the monthly contributions for their employees (or else face a steep fine).  Because of this, if you are eligible for medical benefits at work, you stand a good chance of receiving quality health insurance at a low cost.

Check Out Your Parents’ Health Insurance Plan

PPACA allows children to stay on their parents’ health insurance plan until the child reaches age 26.  If you are under this cap, and your parent is already covered by a family plan, then adding you to the plan can typically be done without an additional cost.

Increase Your Out of Pocket Liability

Out of pocket limits on health insurance plans are part of the formula that determines premiums.  The higher the out of pocket expenses, such as deductibles, the lower the premium.  If you want to be able to have coverage at a low cost, consider a plan with a high deductible or what some people would call a catastrophic plan.  It will leave you with high medical bills if you need service, but at least you’ll be able to afford the insurance to start with.

There are several ways to find quality insurance for all people, and these low income health insurance options are great places to start.

Read More

Is Free Health Insurance Available to Young People?

It can be difficult to be a young person and be on the hunt for medical insurance.  You might be a student or early in your career, and the cost of a decent plan can be more than you can afford.  Fortunately, if you fall into certain categories, there are ways to get free health insurance.  While not everyone will qualify for no cost insurance, it is worth looking into if you are having trouble paying for your medical needs.  And don’t forget that due to the Patient Protection and Affordable Care Act (PPACA), or Obamacare as many people know it, there is a tax to be paid if you do not have an insurance plan.  While the tax is small to begin with, eventually it will increase to be a significant expense.

Look at Your Parents’ Medical Plan

One of the key features of PPACA is the fact that a child can stay on their parent’s medical plan until the child reaches age 26.  If your parent has a plan, there is a chance you can be added at no extra cost, but not necessarily.  If your parent is on a plan on only covering himself or herself, then there will be a cost to add you.  Or if both of your parents are on a plan with just the two of them, then there will probably be a cost to add you.  However, if the plan that your parent has already includes another child, then adding you will most likely not add an additional premium cost.

Adding you to an existing plan can be a great way to receive free health insurance.

Check the Insurance Plan at Your Own Job

If you work at a place that offers you benefits, check the plan that you are offered at work before going elsewhere to look for free health insurance.  While most employers require a premium contribution from their employees, some provide the insurance free of charge.

Free Health Insurance on the Health Insurance Exchanges

Beginning in 2014, PPACA created state-run health insurance exchanges.  These exchanges are online marketplaces that allow the user to go on the Internet and comparison shop for the medical plan that best suits their needs.

In addition, PPACA has allowed for tax credits for low income earners if health insurance is bought through the exchange.  If you earn less than 400% of the poverty level you are eligible for this subsidy.  The lower your income, the higher the credit.  The marketplaces will be able to determine online if you are eligible and can assist in reducing the monthly premium.  If your income is low enough, you may be able to buy free health insurance.

Medicaid

Medicaid is a state-run program that assists low income households with medical assistance.  If health insurance is difficult to afford, check with your state Medicaid program to find out details and your eligibility.

Free health insurance is not available to everyone, but if you take the time to look around you might be able to find coverage at little or no cost.

Read More

How Much Does Health Insurance Cost a Young Adult

When you are shopping for health insurance for the first time, you will invariably ask, “how much does health insurance cost?”  This is a perfectly reasonable question.  When you buy a car, television, or any other major purchase you want to know how much it is going to cost.  And just like those things, there are a lot of variables that go into the cost of a health insurance plan.

Health Insurance Trend

One of the biggest factors that affect the cost of health insurance is medical trend.  Trend is the percent increase in health care costs.  Here is a good explanation of what causes medical trend.  A good estimation of trend is extremely important in determining how much health insurance costs.  If the trend estimation is off, premiums will be too high or too low.

Plan Design

The benefit design of an insurance plan plays a large part in how much it costs.  Just like with car insurance, a plan with a high deductible will have a lower premium than a plan with a low deductible.  The more financial risk you take upon yourself, the less you will pay in fixed monthly cost.  The same goes with a medical insurance plan.  The higher the deductible, copay, and out of pocket limits, the lower your premiums.

Age of the Individual

The age of an individual plays a big part in the cost of a health insurance plan, but not as much as it used to play.  Younger people need less health care than older people, so younger people pay less for claims.  The Patient Protection and Affordable Care Act (PPACA), or as many people know it, Obamacare, puts a cap on how much more an older person can be charged for an insurance plan than a younger person.

Government Programs and Subsidies

Government programs and legislation provides methods to reduce the cost of health insurance for young adults.  The two big ones are Medicaid and the health insurance exchanges.

Medicaid

Medicaid is a program administered by the states that provides some low income earners with assistance in paying for health care.  Eligibility varies by state, so check with your state’s Medicaid office for details.

If someone makes just enough to not be eligible for Medicaid, but still needs to find a way to cover their children, the Children’s Health Insurance Program (CHIP) can at least help pay for the cost of a young person’s children.

Health Insurance Exchanges

PPACA tried to simplify the answer to “how much does health insurance cost” by setting up health insurance exchanges.  Exchanges are online marketplaces where people can shop for health insurance plans side by side on an apples to apples basis.  Plan designs and premiums are plainly displayed.

However, for certain people, the premiums will not actually be what health insurance costs because of subsidies that are available to people that earn less than 4 times the poverty level.  If you fall into that category, you can receive assistance in paying for your health insurance premiums.

How much does health insurance cost is a question that people are always asking.  It is possible to find low cost health insurance.  With the exchanges and easy to use online tools, it can be easy to find out how much you owe for a medical insurance plan.

Read More