Understanding health insurance 101.

[Sarge47]

This will hopefully help some of you understand what we're up against! So if you're one of those fortunate enough to have a health insurance policy, pull it out & follow along.

1st, defining the terms:

RENEWABILITY:

"Optionally Renewable." The Insurance Company reserves the right to renew your policy or not on a periodic basis, usually annually.

"Non-renewable." Forget about it! Once it's past the end date, that's it!

"Conditionally Renewable." Again, the company can restrict your ability to renew based on the criteria they set down.

"Guaranteed Renewable." The best! The only way you can lose it is if you quit paying the premiums!

TYPES OF PLANS:

"Major Medical:"(Major Med.) Usually top of the line coverage, depending on the solvency of the company. Up front deductables & Co-insurance apply, then they pay 100% of whatever language they've put into your plan, up to a life-time maximum.

"Major Hospital/Surgical:"(Major Hosp.) Payouts are specifically outlined in the policy. They will not pay anymore! Very good for in-patient cases but not always for out-patient.

"Daily Indemnity." Pays a certain amount a day while hospitalized. AARP & Combined Insurance both sell these type of policies.

TRICKY LANGUAGE:

"Usual, Customary, & Reasonable." The insurance company will determine that, usually based on what the costs are in your geographical area. If you are somewhere else where the costs are higher & you go into the hospital you could, quite possibly, pay a lot more out of your own pocket.

"Insurance Companies." All insurance companies are usually governed by a state agency called The Dept. of Ins.. They can only work if you dealt with an agent & if the company you bought from is licensed in your state.
There are other types of entities that also provide health coverage, but are NOT insurance companies; they are PPOs(Preferred Provider Organizations) & HMOs(Health Maintenance Organizations.)
Blue Cross/Blue Shield (BC/BS) is a PPO. Each state has their own & benefits are paid based on what your area charges. An example is that BC/BS of Illinois sucks if you happen to go into a hospital in Florida where the costs are usually much higher. PPOs are exempt from 90% of the laws governing insurance Companies
HMOs are a great way for a young doctor fresh out of Med School to break into a big buisness. These folks will usually approach a big corporation & offer to take all of their people's buisness for a set fee. This way they step into a large book of buisness without having to take years building one up. That's why your choice of Doctors is severely restricted. They also tend to go "belly-up" frequently.

PREEXISTING CONDITION(S):

A medical condition you've already had BEFORE applying for the policy.

SUB-STANDARD BUISNESS:

Writing people up on an insurance policy with preexisting conditions.

ACTUARY:

The "Bean Counter" who figures out how much premiums to charge to pay-out all potential claims while making the company a nice profit!

There is a lot more, but I'm not here to qualify you to take the tests for an Insurance License, but rather to show you the problems that exist in paying for medicaal care! (To be cont.)

[Sarge47]

Okay, let's look at how companies come up with the money to pay claims. They get it by charging a certain amount of $$$ called premiums. If they mis-calculate, they can go into receivership & have to file bankruptcy. This is why most Companies sellling Major Meds have been trying to get out of the buisness anyway. Aids, HIV, Cancer, & other long-going illnesses can rob a company of funds really quick! Most of these companies will usually either refuse to cover people with certain preexisting conditions or "rider-out" the condition, meaning that they will not pay if, in THEIR opinion, the medical charges were brought about by said condition. Furthermore, they have to keep increasing premiums dramatically to help alleviate the financial problems they run into with legitimate claims, oft-times forcing Policy-holders to increse deductables & Co-insurance to keep the policy in an affordable area. I've seen people who had raised their deductables from $250 to as much as $5000 & their Co-ins. from 80/20 to 50/50. They may also have a smaller lifetime amount, say from 5 Million to 1 million. Many large companies have also resorted to extreme premium hikes to shake people off of their policies so they can quit selling them. In other words, Most major companies will avoid writing folks with preexisting conditions. If they do they will HAVE TO increase the premium, sometimes 3 times what is normal. I know, I used to do it for a living. I sold Guaranteed Renewable Major Hosp. & covered 80% of people that other companies wouldn't touch with a 10' rider!

About 15-20 years ago many states were concerned with the amount of people they had that carried no health insurance because of poor health, so they created policies just for them. Here in Illinois it was called ICHIP(Illinois Comprehensive Health Insurance Program.) You had to prove that other Major Med companies found you "uninsurable", be able to pay a large monthly Premium, & get a $250 deductable; 80/20 co with a $1 Million lifetime benifit. Within 3 years they had to double the premium, raise the deductable to $1000, the co to 50/50, & limit the lifetime amount to $500,000. You also had to go onto a very long waiting list as their just wasn't enough money to insure all of those in need. BC/BS of Ill. carried the program. This is what our Government decided that they want to get into!

Now, you may say that, when they make the statement that they're going to FORCE Insurance companies to take lower premiums & do away with "preexisting conditions" penalties, that they don't know what they're talking about, & given the fact that they're politician, you might be justified, but look at this:

It used to be that when you were hired on by a company with a group Insurance plan that you would be immediately covered during their "Open Enrollment" time. Not anymore. If you haven't been previously covered by a group policy, any preexisting condition(s) you may currently have will be excluded for a year. & who's "brainchild" was this you ask? It's part of something called the HIPAA(Health Insurance Portability And Accountability Act) and was Helped into law by the late Democratic Senator: Ted Kennedy!

http://en.wikipedia.org/wiki/Health_...untability_Act

Now the main Question: Why would our Government be wanting to take on this very costly undertaking? What cuts are they planning on making to keep it affordable? Inquiring minds want to know!

[Sarge47]

BTW, the IRS will be monitoring who obeys the law on buying health ins. & who doesn't...& just when you thought it was safe to go back to bed & try to get some sleep!

[LostOutrider]

Very informative, Sarge. Thanks.

[doug1980]

I still don't understand how it will affect the middle class? I know the rich will pay more and the poor will get free care but what about all the rest of us?

[Boker]

I still don't understand how it will affect the middle class? I know the rich will pay more and the poor will get free care but what about all the rest of us?

Sir, I don't think the rich will be picking up the tab for this one. The more money you have the easier it seems to be to protect from Uncle Sam, percentage wise anyways.

[crashdive123]

Every person will be picking up the tab on this one.

[Rick]

Crash is right but the penalties are heavy on those making over $200,000 a year or $250,000 as a couple. Both in income and in Medicare payments. Those are your entrepreneurs. Those are your jobs makers.

[crashdive123]

Before anybody jumps on that $200,000 or $250,000 number - keep in mind the very small businesses. Many of them are sub chapter S corporations - which means that their business income is reported on their personal income tax.

Maybe this example will help. Let's say that there is a small business in your town that makes $250,000 a year. That company employs five people. That company has overhead expenses in the form of rent, materials, payroll (and expenses related to payroll). Let's say those employees are making around $30,000 a year and that the other expenses add up to $65,000 a year. That leaves $35,000 for the owner to either pay him/herself - make capital improvements - hire another employee. The business owner can't do all three. Many a small business owner have gone without pay in order to grow their business. For example - this business does not pay for health care for it's employees, but has researched and found policies that make basic coverage available to them (at their expense). With this legislation, if the business owner does not buy plans that meet the governments guidelines, that business will be fined (taxed) at 8% of payroll. That's $2400 per employee, or $12,000. That $35,000 to pay the owner or expand, or hire just turned into $23,000. Now the owner has a decision to make. Pay him/herself - not enough to hire anybody - or cut staff.

In that example - the business owner is one of the rich. After all, he/she reports $250,000 on their taxes. Keep in mind - they may not have put a penny from the business in their pocket that year. They may have depleted their saving to keep the business running. They may have depleted their business to keep an employee working.

Not all that are called rich really are.

[Rick]

That is an excellent explanation. I didn't think about folks not understanding my entrepreneur comment. You are so soundly on the mark. Add into that sole proprietorships and LLCs. Joe's Plumbing business had a net income of $300,000 last year. Out of that, he may have had $40,000 for himself and he put the rest back into his business. He still gets charged.

Not post, Crash.

[doug1980]

So basically they get penalized for making more money. Are we still not a Capitalistic Country? *nevermind* stay clear of Politics. So basically this will cause more people to lose their job because the small business won't be able to afford employees, which in turn will cause more people to be under the poverty level. So we are paying for even more people to have health care with less people paying for it....what a horrible idea.

[crashdive123]

So basically they get penalized for making more money. Are we still not a Capitalistic Country? *nevermind* stay clear of Politics. So basically this will cause more people to lose their job because the small business won't be able to afford employees, which in turn will cause more people to be under the poverty level. So we are paying for even more people to have health care with less people paying for it....what a horrible idea.

Like I've said --- this is not about health care.

[doug1980]

Not to mention all the "caps" that they say will be implemented by "Big Brother" which will make health care unprofitable so there will be less companies that provide it. Which will limit our possibilities and could make use settle on crappy coverage because there is no other option. Then it will make being a doctor undesireable because they will no longer get paid as much which will cause us to have less and less doctors to go to. Seems like a spiral effect that gets worse as it goes. Maybe I'm just a skeptic though, I tend to only see the negative side of things, and I'm not that edumacated either.

[2dumb2kwit]

Not to mention all the "caps" that they say will be implemented by "Big Brother" which will make health care unprofitable so there will be less companies that provide it. Which will limit our possibilities and could make use settle on crappy coverage because there is no other option. Then it will make being a doctor undesireable because they will no longer get paid as much which will cause us to have less and less doctors to go to. Seems like a spiral effect that gets worse as it goes. Maybe I'm just a skeptic though, I tend to only see the negative side of things, and I'm not that edumacated either.

Sounds to me like you've got a pretty good handle on it.

[doug1980]

I just didn't want to jump to conclusions without knowing all I can about it first. I was hoping there was an up side to it. Of course it's just like anything else, we can never really know all the facts of it, because we can never know what data to believe. I have seen pie charts that state only 5 million Americans don't have health care (not including the 9.7 million illegal immigrants, 17.6 million that make over $50k per year and choose not to have it and the 14 million that qualify for Medicade or other programs) so if that is true than only 2% of the population truley can't afford health care. But is that data accurate or credible? Who knows.

[2dumb2kwit]

I just didn't want to jump to conclusions without knowing all I can about it first. I was hoping there was an up side to it. Of course it's just like anything else, we can never really know all the facts of it, because we can never know what data to believe. I have seen pie charts that state only 5 million Americans don't have health care (not including the 9.7 million illegal immigrants, 17.6 million that make over $50k per year and choose not to have it and the 14 million that qualify for Medicade or other programs) so if that is true than only 2% of the population truley can't afford health care. But is that data accurate or credible? Who knows.

Yeah...and a lot of the sound bites on the news, only tell part of the story.

And just to make it really interesting, not only is it over 2,000 pages of legal/political code talking, they are about to start working on the bill that changes parts of the one signed today.

[Ken]

Many a small business owner have gone without pay in order to grow their business.In that example - the business owner is one of the rich.

Not all that are called rich really are.

You post was a pretty good description of some of the years I've had with my office. We have had some great years. Other years, I've had to put cash back in just to keep the staff employed. We've had phenomenal years and terrible ones. Some cases go on for years. and cost a fortune in out-of-pocket costs, before the payday comes - and once in a while it doesn't.

I really feel that my staff is better equipped to decide how their pay should be used than the government is. One thing I've learned is that staff should be paid a reasonable income and rewarded with bonuses if deserved and circumstances permit. Sharing the gravy is a great way to keep people motivated.

Regardless, I'm the guy that the headaches fall on, and I'm the guy where the buck stops. If things get bad, everyone can move on - except me. I don't keep my office open to lose money.