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If you are like most Americans, your employer supplies you with group health insurance coverage.  If you are responsible for obtaining your own health insurance, it behooves you to become familiar with the subject.

Most plans fall into four basic categories:  Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Point-of-Service plans (POSs), and Exclusive Provider Organizations (EPOs). But there are also differences between plans of the same basic type (for example, not all HMOs are the same), so be sure to read all your materials and discuss your questions with us before selecting a plan. 

Traditional Insurance

Traditional health insurance is generally the most flexible type of health plan.  It allows you to choose any doctor you want to and see specialists without getting approval from a "primary care physician" or "gatekeeper" first.  However, depending on the plan, certain restrictions may apply.  For example, you may need to get the insurance company's approval before checking into a hospital, unless it is an emergency. With traditional health insurance, you will usually have to spend a certain amount on medical bills each year before your insurance starts to pay.  This is called a deductible.  After that, you will have to pay a percentage of each charge, called a co-payment.  The insurance company will pay the rest of the charge based on what it considers reasonable.  Many insurance plans protect you from large medical expenses by limiting your total expenses in any given year, called your maximum out-of-pocket expenses.  There may also be a cap on total benefits--a maximum amount the insurance company will pay in your lifetime.

Health insurance companies are regulated by the California Department of Insurance.

HMO (Health Maintenance Organization)

There are several types of HMOs. Most will only cover your expenses if you go to a health care provider within their organization (unless it's an emergency or you're out-of-town). They may require that you choose a primary care physician who will coordinate your care. You wil probably have to get approval from that physician before seeing a specialist.  You must get approval from the HMO before entering a hospital or receiving some other kinds of non-emergency care.

Most HMOs do not require that you meet a deductible each year and require only a small co-payment (for example, $5 per visit or prescription).  Most of the paperwork is handled by the organization.

HMOs are regulated by the  California Department of Managed Health Care.

PPO (Preferred Provider Organization)

PPOs are generally less flexible than traditional health insurance plans but more flexible than HMOs.  You can see any health care provider you want to (including a specialist), but your co-payment will be higher if the physician you choose is not a "preferred provider", that is, a physician that the health plan has a contract with.

PPOs will almost always require that you get their approval before entering a hospital.  But they are more likely to cover checkups and other preventive medical services than traditional health insurance plans, and most preferred providers will file your claims for you.

POS (Point of Service)

A POS plan is similar to an HMO in that you can see physicians within a network and pay only a small co-payment.  But you can also see physicians that aren't in the network and pay a percentage of the charge, after you've met your deductible, as you would with a PPO plan.

There may be restrictions on the services you can receive outside the network with a POS plan.  For example, prescription drugs, organ transplants, treatment for infertility, and mental health services may not be included.

EPO (Exclusive Provider Organization)

An EPO is similar to an HMO, except that it is regulated by the California Department of Insurance and generally pays physicians and other healthcare providers differently.  EPOs will only cover your expenses if you see a physician that is in the EPO's network, unless it is an emergency.

Which should you choose?  If you care less about cost and more about the ability to choose your own physician - stick with either an indemnity, PPO or POS plan.  Contrary to popular belief, HMO plans will be more expensive due to the fact that you are pre-paying for your services.

Among managed-care plans, PPOs and POSs tend to spell slightly higher out-of-pocket cost to you than HMOs.  It's a simple trade-off: more flexibility equals extra cost.  So if you don't have any serious medical conditions or you have your children and are likely to take them in for lots of potentially costly checkups, an HMO may be your best choice. Check up Health Insurance Choices

Qualified HSA Medical Plans 

Questions and Answers:

Q: What is a HSA?

A: An HSA is a personal savings account very similar to an Individual Retirement Account (IRA) that gives you more control over how you save for and manage your health care costs. It allows you to earn interest as you save for qualified medical expenses on a tax-advantaged basis.  The difference being the money deposited into a HSA is used to pay for health care expenses instead of providing retirement income as with an IRA.

Q: Who qualifies?

A: Anyone that is covered by a Qualified High Deductible Health Plan (HDHP) can qualify to open and contribute to a HSA.

Q: What are the benefits of opening and contributing to a HSA?

A: HSA legislation created tax benefits that you can take advantage.  Deposits into and earnings from a HSA are tax deferred and can be withdrawn tax-free and penalty-free to pay for qualified medical expenses.

Q: What are some of the qualified medical expenses that can be paid from the HSA?

A: Qualified medical expenses are generally defined as costs associated with the diagnosis, cure, treatment and/or prevention of an illness or injury.  This would include doctor office visits, medications (both OTC and prescriptions), dental expenses (including orthodontia) and vision expenses.  It even covers eyeglasses, contact lenses and laser eye surgery.  You can even use the funds to pay long-term care insurance premiums and in-vitro fertilization.  Typically, funds cannot be used for cosmetic surgery, however they can be used to pay for laser eye surgery.

Q: What if I do not use all the money contributed to the HSA in the year.

A: Any remaining balance rolls over and accumulates to be available for medical expenses in the future.  If funds still remain at age 65 they can be taken as penalty-free retirement income withdrawals.

Q: What are my annual contribution limits?

A:  2015 Maximum contribution for a single individual is $ 3,350 and $ 6,650 for a family. 

Q: Which companies offer HSA qualified health plans?

A: Aetna, Anthem Blue Cross, Assurant*, BlueCross BlueShield of Georgia*, BlueCross BlueShield of Illinois*, Blue Shield of California, Celtic, Cigna, CoventryOne, HealthNet, Humana, Kaiser, IHC Group*, Independence Blue Cross*, LifeWise Health Plan of Washington*, Regence Blue Shield*, Scott and White Health Plan*, UnitedHealth Care, WPS Health Insurance*.  * Outside California.

Please speak to your tax advisor to see if you are eligible for a Health Savings Account. 

 For a HSA plan comparison, please click on the following link.  HSA Plan Comparison.

A Strong Case for Health Savings Accounts

The momentum continues as HSA's build popularity among the working class.  Its a good reason, since the tax advantaged HSA's generate some impressive results over a long period of time.  Here is an example of how an HSA will cost less in the long run.  The assumptions are:

1. Premiums on each plan increased 10% per year.

2. The deductible on the HSA plan would be 2,400 and this is the amount contributed each year for 10 years.

3. The insured is in a 30% tax bracket.

Health Reimbursement Arrangement (HRA)

If you select a High Deductible Health Plan and you are not eligible for an HSA, you will be given an HRA.  The health plan will credit a portion of the health plan premium to your account.  The amount for either a Self Only enrollment or a Self and Family enrollment will be the same as the amounts that will be deposited in HSAs in the same plan.  You can use funds in your account to help pay your health plan deductible and/or qualified medical expenses that do not count toward the deductible.  You also can use the account to pay medicare premiums.

Features of an HRA include:

• Tax-free withdrawals for qualified medical expenses
• Carryover of unused credits, without limit, from year to year
• Credits in an HRA do not earn interest
• Credits in an HRA are forfeited if you switch health plans, or if you leave federal employment other than to retire
• Your HRA is administered by the health plan

Many individuals are unsure of the difference between individual and group (employer paid) medical coverage.  The main differences are as follows:

1.   Employer paid benefits can be cancelled and changed by your employer. No Control.

2.   Employer paid benefits can be cancelled and changed by the insurance company. No Control.

Most people pay monthly for Part B.

Part B (Medical Insurance)

Helps Pay For:

Doctors' services, outpatient care, and other medical services that Part A doesn't. Part B helps pay for these covered medical services and items when they are medically necessary. Part B also covers some preventive services. Information about your coverage under Medicare Part B can be found in the Your Medicare Coverage database.

Cost:

Starting January 1, 2007, your Part B premium will be based on your income. Most people pay the standard monthly Part B premium of $ 99.00 in 2012. For more information, see our FAQ: Medicare Part B Monthly Premiums in 2012.

In some cases this amount may be higher if you did not choose Part B when you first became eligible. The cost of Part B may go up 10% for each full 12-month period that you could have had Part B but didn't sign up for it, except in special cases. You may have to pay this penalty as long as you have Part B.

Enrolling in Part B is your choice. You can sign up for Part B from three months before you turn 65 to three months after you turn 65. To sign up, call the Social Security Administration at 1-800-772-1213 or visit or call your local Social Security office to sign up. If you choose to enroll in Medicare Part B, the premium is usually taken out of your monthly Social Security, Railroad Retirement, or Office of Personnel Management payment. In these cases, you won’t get a bill for your premium. If you don’t get any of these payments, Medicare sends you a bill for your Medicare Part B premium every three months. If you don’t get your bill by the 10th of the month, call the Social Security Administration at 1-800-772-1213. TTY users should call 1-800-325-0778. If you get benefits from the Railroad Retirement Board (RRB), call your local RRB office or 1-800-808-0772.

For More Information About Medicare Part B Coverage:

Visit the Your Medicare Coverage database.

Who is Eligible for Medicare?

Generally, you are eligible for Medicare if you or your spouse worked for at least 10 years in Medicare-covered employment and you are 65 years or older and a citizen or permanent resident of the United States. If you aren’t yet 65, you might also qualify for coverage if you have a disability or with End-Stage Renal disease (permanent kidney failure requiring dialysis or transplant).

Here are some simple guidelines. You can get Part A at age 65 without having to pay premiums if:

• You already get retirement benefits from Social Security or the Railroad Retirement Board.
  
  
• You are eligible to get Social Security or Railroad benefits but haven't yet filed for them.
  
  
• You or your spouse had Medicare-covered government employment.

If you are under 65, you can get Part A without having to pay premiums if you have:

• received Social Security or Railroad Retirement Board disability benefits for 24 months.
  
  
• End-Stage Renal Disease and meet certain requirements.

While you do not have to pay a premium for Part A if you meet one of these conditions, you must pay for Part B if you want it. Starting January 1, 2007, the Part B premium will be based on your income. Most people pay the standard monthly Part B premium of $ 99.00 in 2012. For more information, see our FAQ: Medicare Part B Monthly Premiums in 2012.

The Part B monthly premium

Note: You will be eligible for Medicare when you turn 65 even if you aren't eligible for Social Security retirement benefits. For more information, please visit our retirement age FAQ.

Note: For more information about eligibility for Medicare, call the Social Security Administration at 1-800-772-1213 or visit your local Social Security Office. TTY users should call 1-800-325-0778.

 If you would like more information, call (800) 501-8078 or E-Mail us at  Kaplanmanangement.net  All information is confidential.