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Types of Insurance: All the Basics

Types of Insurance: All the Basics

There are many different types of health insurance to be aware of. Different types of health insurance may suit your needs at different stages of life.

Group Health Insurance

Group Health Insurance are plans are a type of health insurance offered by your employer. Most plans operate as either HMOs or PPOs.

HMOs are health maintenance organizations. Generally speaking, your monthly premiums will be lower, but you must use an in-network physician. Should you need to go out of network, except for a true medical emergency you will pay for the entirety of the costs. HMOs only work with in-network doctors. You can however apply for a gap exception under specific circumstances. But be warned. There will be a lot of paperwork!

PPOs are preferred provider organizations. They offer more flexibility but generally speaking with higher monthly premiums. You will pay less to see an in-network doctor, but you will still have coverage with an out-of-network doctor.  Additionally, with a PPO, you will be able to arrange to see a specialist on your own. An HMO requires that your primary care physician arranges any visit to a specialist.

COBRA

Should you choose to leave your job or if you are fired, you may be eligible for COBRA. Your premiums will be MUCH higher, but you’ll be able to keep your exact same coverage. Because of the high prices tag, this is best for the short term. In fact, you’ll only be able to keep COBRA for a period of up to 18 months. Your company needs to provide you with a COBRA notice and you’ll have 60 days to enroll. Payment and coverage are retroactive.

Marketplace Insurance

Another type of health insurance is marketplace insurance. This is part of the affordable care act. Premiums are determined by your household size and income. You may be eligible for a premium tax credit which can significantly lower your monthly premiums. You want to try to lower your MAGI to increase your eligibility. There are many HMOs to choose from, but few PPOs. You may opt for an EPO instead. You can view available plans on healthcare.gov.

Marketplace Insurance Plans are divided into four metal tiers: Bronze, Silver, Gold & Platinum. The metal tier is determined by the cost-share, not the benefits or coverage. If you are ineligible for a premium tax credit on Healthcare.gov, you may want to look into private insurance. It may or may not be more expensive, but your options are pretty much endless.

Private Insurance

Private health insurance is another one of the types of health insurance. You may want to look into short-term medical insurance. These plans are not offered everywhere and are not for everyone. However, they may be a great way to save money. They are not ideal for anyone with an expensive preexisting condition. At the very least preexisting conditions will not be covered in the first year. Perhaps, not at all. They are also not ideal for those with young children or people wishing to become pregnant and start a family. However, if a short-term medical plan is for you, you can add benefits and tailor them to meet your needs. STM will only be available until you turn 65. At that point, you can enroll in Medicare.

Medicare

You will most likely be automatically enrolled in Original Medicare (Medicare Part A & Medicare Part B) when you turn 65. It will cover most of your medical needs. Of course, you have the option to supplement your Medicare coverage with a Medicare Supplement Plan (Medigap). Also, consider Medicare Part D. Another option is to replace Original Medicare with Medicare Advantage. You can view the available plans on medicare.gov.

Original Medicare will cover your inpatient and outpatient needs. If you wish to eliminate deductibles and copays, you can supplement your coverage with a Medigap plan. Then for prescription drug coverage, you would add Part D.

You may also replace Original Medicare with an all encapsulating Medicare Advantage Plan. Part C plans will cover the benefits of Original Medicare. They also offer additional benefits such as hearing, dental, vision, and prescription drug coverage. However, you will be giving up the larger Original Medicare Network.

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