As Allstate Benefits' Vice President of National Accounts, Trevor Garbers knows health insurance. He, unfortunately, is part of the minority. For many Americans, the ins and outs of insurance are as familiar as a foreign tongue.
Everyone needs insurance, but barely anyone understands it. This time-standing dilemma causes people to misspend money on insurance products they may not want or even need. Consumers have accepted the supposed complexity of insurance and so the problem persists.
Yet, if insurance companies are constructed to aid their clients, why are so many people consistently confused? Trevor Garbers believes in the power of a knowledgeable client.
"Insurance is expensive and a heavy burden on many individuals. It makes no sense to mislead clients or make options more complicated than necessary," he said in a recent interview.
Though seemingly simple, when applied to health insurance, the following questions are oftentimes overly complex and misunderstood:
Is health insurance a necessity?
Having coverage can mean the difference between opportune treatment and a lifetime of debt. For the uninsured, the diagnosis and surgical treatment of a broken wrist can cost upwards of $10,000. For the insured, however, that hefty bill plummets dramatically.
“While those with insurance pay monthly premiums in order to maintain their coverage, one bad injury or sickness could ultimately end up costing an uninsured individual a fortune he or she may owe for years to come," Trevor Garbers said.
Following the Affordable Care Act, most Americans are obligated to obtain some sort of "minimal" coverage. Those who don't abide by the rules could ultimately face tax penalties. In 2014, these infractions total approximately 1% of the insurance forgoer’s yearly income.
What are the various costs of health insurance?
Plan costs are split into two categories: monthly premium s and various out-of-pocket costs. These out-of-pocket costs only come into play when an individual must seek out medical care. Generally, the more money clients pay upfront in monthly premium payments, the less they pay when medical attention is needed. Depending on the individual client's medical situation, certain payment plans are more ideal. "Someone more susceptible to injury or illness will most likely benefit from a plan with a higher monthly premium," Trevor Garbers said.
Out-of-pocket costs are split into three subsections: deductible, coinsurance and co-pay; each of which varies in amount from plan to plan. The deductible is equal to the amount of money the client must pay for services before the insurance company kicks in and takes over the outstanding tab. For a run-of-the-mill doctor’s office visit, a small co-pay is typically all that is required. If further procedures, such as a mole removal, are in order clients may later be billed a coinsurance fee, which is calculated by the insurance carrier after the deductible has been met.
Those shopping for health insurance on their own should determine the best premium, deductible and coinsurance combination that fits their financial needs. As co-pays are normally smaller amounts, they should weigh less on the grand scale of making that final decision on a plan.
What does my plan cover?
Starting this year, the Affordable Care Act mandates that the insurance offered to individuals and by small businesses includes the ten essential health benefits. This comprehensive grouping includes: ambulatory patient services, hospitalization, maternity and newborn care, mental health and substance disorder services and oral and vision care; among others listed here.
Larger employer groups offer slightly different packaging, but typically cover the same necessary categories. In these cases, Garbers urges clients to retrieve a summary of benefits and coverage from their employer.
How does an out-of-pocket maximum work?
For the unlucky ones requiring a magnitude of medical services, there is one fortunate perk. Once a client reaches a set limit for out-of-pocket spending, the insurance provider is obligated to pay 100% of the medical bills for the remainder of the year. In the 2014 insurance marketplace, the maximum out-of-cost limit is set to no more than $6,350 for individual plans and $12,700 for family plans.
Trevor Garbers emphasizes the fact that this out-of-pocket maximum does not include monthly premiums and services completed by out-of-network medical providers.
What is the difference between in-network and out-of-network?
In the complex world of health insurance, not all doctors are equally attainable. The rule of the thumb when choosing a doctor or health practice is to “know before you go.” All health practices accept a selected amount of insurance carriers. Generally speaking, clients should try to find a doctor that accepts their insurance provider, also known as an in-network doctor. If clients choose to select an out-of-network doctor, that specialist may come with a heftier price tag, as he or she does not have to oblige by set rates established by the insurance policy.
For some, this price may be slightly higher than using an in-network doctor. For example, co-pay that is
usually $20 for an in-network doctor may rise to $40 for out-of-network. It’s essential, however, to pay close attention when debating the in- or out-of-network debacle. Garbers warns that some insurance policies won’t pay a single cent for out-of-network treatment.
What are the benefits of employer-sponsored health insurance?
In addition to an often cheaper cost, employer-sponsored insurance, also referred to as voluntary health insurance, carries an array of additional benefits for those able to obtain it. Most employers focus on “value-based” purchasing, placing high emphasis on pricing and quality. Studies show that those opting to browse the insurance market on their own find themselves overwhelmed and underprepared to make accurate and quality-focused decisions. Insuring with a group of employees also spreads risk, ensuring that families with sick members are not rejected for coverage, an ill-fated threat they face when shopping independently.
People have enough to worry about on a day-to-day basis. According to Trevor Garbers, “When injury and illness are thrown into the everyday stresses of life, understanding the overall basics of health insurance can transform a hugely stressful ordeal into a much more manageable one.”