| Health insurance companies have done a good job | | | | unless you live in one of the five states have |
| of offering a wide range of options for | | | | adopted "guarantee issue" laws. New York, New |
| consumers-perhaps too good of a job, because | | | | Jersey, Vermont, Maine, and Massachusetts |
| selecting the best individual health insurance plan is | | | | require insurance companies to provide health |
| a bewildering task that leaves many people | | | | insurance to residents regardless of any medical |
| uncertain about the choices they have made. | | | | issues they have. Other states offer insurance to |
| Here are some things to consider when choosing | | | | high-risk applicants through "pools" subsidized by |
| individual health insurance: | | | | the state. |
| 1. Budget. The purpose of health insurance is to | | | | 4. Prescription drugs. If you regularly take |
| prevent medical bills from sending you into debt. It | | | | prescription drugs to control high blood pressure, |
| does not make sense to take on health insurance | | | | diabetes, asthma, or another chronic condition, be |
| premiums that-directly or indirectly-will do the | | | | sure to compare the medication benefits of |
| same thing. Settle on a spending limit of what you | | | | competing plans. See if the annual deductible |
| can really afford before you begin shopping for | | | | applies to medications, or if they are treated |
| features. | | | | separately. Find out how much the co-payment is |
| 2. Consistency. It takes some time to develop | | | | and if there is an annual limit to the drug benefit. |
| rapport with a physician. If you have a good | | | | Finally, see if you are required to use generic |
| relationship with your doctor, you may make | | | | drugs instead of name brand drugs. |
| preserving it your priority. If so, your choice of | | | | 5. Tax liability. You have to pay taxes on the |
| health plans may narrow. If your doctor | | | | money you spend for health insurance premiums, |
| participates in an insurance network, such as an | | | | but you might be able to avoid paying taxes on |
| HMO, PPO, IPA, or POS, then you will want to | | | | the deductible amounts. The federal government |
| select the corresponding plan. If your doctor is in | | | | allows you to put a certain amount of your |
| more than one plan, you can decide between | | | | income-up to $2,850 for an individual and up to |
| them based on competing features. If your | | | | $5,650 for a family-per year into a Health Savings |
| doctor is not affiliated with any network, you will | | | | Account (HSA). This money is sheltered from |
| need a "fee-for-service" or indemnity plan. With | | | | federal and state taxes. The savings can be large, |
| fee-for-service coverage, the insurance company | | | | depending on where you live and how much you |
| and you share medical costs on an 80-20 basis, | | | | make. You could be paying as much as 44.95% |
| with you being responsible for 20 percent of the | | | | of your income for state income tax (9.3%), |
| fees. Most indemnity plans have a high annual | | | | federal income tax (28%), and Federal Insurance |
| deductible as well. They also set limits on what | | | | Contributions Act (FICA) tax (7.65%). By |
| they will pay for specific treatments. These limits | | | | sheltering the maximum $5,650 in an HSA |
| are known as "usual and customary" rates. | | | | account, you save $2,539 in taxes. The funds in |
| 3. Medical conditions. If you are in good | | | | an HSA belong to you, rolling over at the end of |
| health-including normal weight-move on to the | | | | each year. Contributions remain untaxed as long |
| next section; you can join any plan. However, if | | | | as you use them for medical purposes or |
| you are overweight or if you have a chronic | | | | withdraw them after age 65. The earnings on |
| medical condition such as diabetes or asthma, you | | | | funds in an HSA are tax-deferred. To open an |
| need to learn which plan-if any-will cover you. | | | | HSA, you must enroll in a "qualified" High |
| Insurance companies consider any condition that | | | | Deductible Health Plan (HDHP). The minimum |
| has been diagnosed or treated before applying for | | | | deductible in an HDHP is $1,100 per individual or |
| coverage to be "pre-existing." Under the Health | | | | $2,200 per family. With high deductibles, most |
| Insurance Portability and Accountability Act, a | | | | HDHP plans have low monthly premiums. Since |
| pre-existing condition must be covered without a | | | | you pay the deductibles with tax-free dollars, the |
| waiting period when you join group plan, as long | | | | "real" cost of an HDHP plan can be less than a |
| as you have been insured during the last twelve | | | | traditional plan. |
| months. When buying individual health insurance, | | | | By considering these five variables, you should be |
| however, the insurance company can place a | | | | able to choose the health insurance plan that best |
| waiting period on coverage related to the | | | | meets your needs. |
| condition, or it can decline to cover you outright, | | | | |