Types of Health Insurance

• Traditional Health Insurance usually involves what are called "fee-for-service plans" -- you pay a certain amount of your medical expenses (your deductible) when you require medical attention. Once your deductible is met, your health insurance pays the remainder (typically the majority) of the bill. Fee-for-service plans generally offer a higher degree of flexibility than managed care plans, but have higher premiums, higher out-of-pocket expenses, and more paperwork.
• Managed Care Health Insurance are Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Point-of-Service (POS) plans. An arrangement between the insurance company and a pre-selected network of health care providers guides the medical treatment you are entitled to receive under the terms of your health insurance policy. Generally, managed care plans cost less than traditional plans, but impose certain limitations and are less flexible.

Health Insurance: Group/Individual Coverage

The difference between group and individual health plans is whether or not the plan is connected with an employer or organization.

• Group plans insure group members without regard to the health status of any of its members. Group plans typically cost less and offer broad coverage. People who receive health insurance as part of their employee benefits are covered by group plans. Self-employed people and individuals who qualify for membership benefits in a particular organization or association may also be eligible for a group health plan.
• Individual plans take into account the individual's health status, and are medically underwritten. Which means that an individual's medical records and history are evaluated for certain risk factors. As a result of the evaluation, coverage may be denied or certain exclusions can be attached to the individual policy. Individual health insurance typically costs more than group insurance, and in some cases (major health risk factors) may be extremely costly, if available at all.

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Your first thoughts should focus on your needs. If you are a healthy, younger single person, your needs may be relatively small compared to an older person with a family. For women of childbearing age, the costs associated with pregnancy should be a consideration. Your family's medical history and possible medical predispositions are other factors. Even if your are covered by a group plan, there are issues associated with the type of plan to choose -- co-pays, choice of doctors, flexibility, paperwork, etc.

Summit Insurance can provide information and answers that will enable you to choose the right plan for you.

Health Savings Accounts (HSA) help you take control of your health care expenses with a tax-favored savings account and comprehensive medical coverage.

• What is an HSA? An HSA combines high deductible health insurance with a tax-favored savings account. Money in the savings account helps pay the deductible. Once the deductible is met, the insurance starts paying. Money left in the savings account earns interest and is yours to keep.
• Why High Deductible Health Insurance? To get the benefits of an HSA, the law requires that the savings account be combined with high deductible health insurance. High deductible health insurance costs less than traditional $250 or $500 deductible coverage, because the insurance company doesn't have to process and pay claims for routine, low-dollar medical care.

How does an HSA work?

• You obtain coverage under a qualified health insurance plan with a minimum deductible of $1,050 for singles and $2,100 for families.
• Each year you're allowed to save 100 percent of the health plan's annual deductible, up to $2,700 for singles and $5,450 for families in 2006 (in most states). Older Americans can save even more!
• You use the savings account to pay for your lower-dollar medical expenses, or those that aren't covered by the health plan.
• Once you meet the deductible, the health insurance covers your medical expenses as defined in the policy.

HSA Coverage Benefits

Medical

• 100% coinsurance after the deductible is met (optional 80% coinsurance to lower premium).
• One deductible per family.
• Comprehensive: Quality medical, including adult preventive care and prescription drugs.
• Once you meet the deductible, the health insurance covers your medical expenses as defined in the policy.

Savings Account

• Savings can be used to help pay the deductible and for non-covered medical expenses, such as dental and vision.
• Savings reduce or eliminate annual out-of-pocket exposure.
• Savings not spent remain in the HSA tax-deferred.

Tax Benefits

• Tax-deductible: Contributions to the HSA are 100% deductible -- just like an IRA (see brochure insert for legal limit).
• Tax-favored: Withdrawals for covered medical expenses are never taxed.
• Tax-deferred: Interest earnings accumulate tax-deferred, and if used for qualified medical expenses, are tax-free.

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