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Individual Health Insurance
What it protects against
The financial consequences of obtaining health care.
How it works
Individuals pay premiums, and the insurance company pays for certain health-care costs covered in the policy. Most non-elderly Americans with private health insurance receive it through their employers, nearly all of whom pay at least half the premiums. Individuals must pay all premiums for individual health insurance. In most states, premiums vary by age, and most states allow insurers to medically underwrite applicants. Some states sponsor high-risk pools for people who cannot get coverage on the open market, though premiums can be high. In states where age-based premiums and medical underwriting are not allowed, average premiums tend to be higher. Premiums vary greatly by state.
Who needs it
Anyone without health insurance should consider buying it. Health-care costs can have catastrophic results on an individual's financial portfolio. Most health plans offer at least $1 million in lifetime maxium benefits. Some even offer $5 million or more.
Who may not need it
People with group health insurance through their employer or an association. Also, federal Medicare coverage begins at age 65. The poor may qualify for coverage under the federal Medicaid program or through state Children's Health Insurance programs.
When to buy it
When you don't have health insurance. A serious disease or accident can easily cost more than $100,000. Health care for the uninsured tends to be more expensive than for the insured, because insurers negotiate prices with providers in their networks.
How you pay for it
Periodic payments.
Terms to Know
Case Management
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A system of coordinating medical services to treat a patient, improve care and reduce cost. A case manager coordinates health care delivery for patients.
Coinsurance
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In property insurance, requires the policyholder to carry insurance equal to a specified percentage of the value of property to receive full payment on a loss. For health insurance, it is a percentage of each claim above the deductible paid by the policyholder. For a 20% health insurance coinsurance clause, the policyholder pays for the deductible plus 20% of his covered losses. After paying 80% of losses up to a specified ceiling, the insurer starts paying 100% of losses.
Copayment
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A predetermined, flat fee an individual pays for health-care services, in addition to what insurance covers. For example, some HMOs require a $10 copayment for each office visit, regardless of the type or level of services provided during the visit. Copayments are not usually specified by percentages.
Health Maintenance Organization (HMO)
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Managed health-care plan that provides medical care to its members through a network of participating health-care providers.
Health Savings Account
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Plan that allows you to contribute pre-tax money to be used for qualified medical expenses. HSAs, which are portable, must be linked to a high-deductible health insurance policy.
Out-of-Pocket Limit
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A predetermined amount of money that an individual must pay before insurance will pay 100% for an individual's health-care expenses.
Point-of-Service Plan
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Health insurance policy that allows the employee to choose between in-network and out-of-network care each time medical treatment is needed.
Preferred Provider Organization
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Network of medical providers which charge on a fee-for-service basis, but are paid on a negotiated, discounted fee schedule.