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Insurance

Buying insurance is the most common way that people manage risk and loss. There are many different ways to buy insurance. With so many sources of information and policies available, deciding what to purchase can be difficult, especially when it comes to comparing price and coverage.

Even if you purchase insurance, owning insurance is more than just paying the premium. It also means knowing what coverage the policy offers, should you experience a loss.

The following resources can help ensure that you have the protection you need, when you need it.

Catastrophic Health Care Coverage for Those Under 30

Rosemary K. Heins, Extension Educator — Family Resource Management

January 2014

Because of the Affordable Care Act or ACA, those under age 30 and people with hardship exemptions may buy a "catastrophic" health plan. This type of plan protects against very high medical costs — or medical catastrophes.

A catastrophic plan generally requires the holder to pay all of their medical costs up to a certain amount. These high deductible amounts are $6,350 for an individual and $12,700 for a family before insurance coverage begins. The attraction is that the premiums are low; they could be as little as $50 per month.

For people under age 30, this coverage satisfies the health insurance requirement. It includes coverage for three primary care visits per year and preventive care at no cost, even before the deductible is met. If the person needs a lot of care, this coverage protects against worst-case scenarios due to serious accidents or illness.

The ACA also allows young people to remain on their parents' health care plan until they turn age 26. This is true even if the young people are:

  • Not living with their parents,
  • Not financially dependent on their parents,
  • Married,
  • Students, or
  • Eligible to enroll in their employer's plan.

When choosing to remain on a parents' plan, a person should check that in-network health care providers are conveniently located, because using out-of-network providers can be very costly.

Catastrophic plans are also available for those over 30 if they qualify for a "hardship exemption." To learn more, check out the heathcare.gov and the Mnsure websites for more information.

Source

"Can I buy a "catastrophic" plan?" www.healthcare.gov/can-i-buy-a-catastrophic-plan/

Health Insurance Definitions

Rosemary K. Heins, Extension Educator — Family Resource Management

It is not fun to have an illness and some people feel ill just trying to make sense of the words used by the insurance industry. Consumers need to understand insurance terms to be smarter about their health insurance dollars. Let’s review four of the terms: premium, co-payment, co-insurance and deductible.

Premium is the amount that must be paid for your health insurance or plan. You and/or your employer usually pay it monthly, quarterly or yearly.

Co-payment is a fixed amount, for example $15, you pay for a covered health care service, usually when you get the service. The amount can vary by the type of covered health care service and some services, based on the plan, may not have a co-payment.

Co-insurance is your share of the costs of a covered health care service, calculated as a percent of the allowed amount for the service. For example, if your co-insurance rate is 30% and a procedure costs $1,000, the insurer will pay $700 and you will owe $300.

A final term, deductible, is the amount you owe for health care services before your health insurance plan starts to pay within a calendar year. Certain health care services are subject to a deductible and others may not be. For example, if your deductible is $1,000, your plan won’t pay anything until you’ve met your $1,000 deductible for covered health care services. Each calendar year the deductible amount will need to be met before the insurance pays.

Insurance terms can be confusing. And I’ve only reviewed four of the many that would be in a good health insurance glossary. The message is if you don’t understand a term, ask questions, to be an informed consumer.

For answers to your health insurance questions, go to https://ask.extension.org/groups/1790

Considerations in Choosing a Health Insurance Plan

Rosemary K. Heins, Extension Educator — Family Resource Management

November 2013

Comparison shopping can save you dollars; this is even mo

Start by doing an inventory of how you use or may use health care services. Do you expect a lot of doctor visits? How many prescriptions do you need to fill regularly? Do you see any specialists? Is there a chronic disease you are managing? Do you anticipate in any health care changes in the coming year, like for having a child or a child turning 27?

You also need to determine costs that include the monthly premium and how much you have to pay out-of-pocket for services when you get care. Health care plans available through the health insurance marketplaces are put into categories based on the percentage of cost you are willing to take on. The lower the premium, the higher the out-of-pocket costs when you need care. The higher the premium, the lower the out-of-pocket costs when you need care.

Another factor to consider is the possibility that because your income is lower, you are eligible for tax credits. These are potentially available by selecting a health care plan made available through the health insurance marketplace. In Minnesota this is called MNsure. For more information you can go to the MNsure website or call 1-855-366-7873.

The bottom line is that you need to balance affordability with coverage. That begins by looking at the total picture of your households' health care needs.

Source

MNsure.org

Give Yourself an Insurance Check-up

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

We buy insurance to manage the risk when a disaster occurs like a fire, tornado or flood. How long has it been since you’ve reviewed your homeowners or renter’s insurance policy to be familiar with what your coverage is?

The first question should be is "what type of coverage do I have?" Check for the following.

  • A homeowner’s insurance policy covers the structure, belongings and legal obligations if someone is injured at your home. A renter’s policy does not insure the structure, but otherwise provides similar coverage.
  • Check the type of replacement value provided by the policy either actual cash value or replacement value. Actual cash value is the amount it would take to repair damage to a home or to replace it contents after allowing for depreciation. Replacement cost is the actual amount it would take to rebuild or replace a home and its contents.
  • What are the liability limits which protect you legally if a non-resident visits, has an accident and gets hurt. With a few exceptions, such as auto or boating accidents, all-purpose liability coverage follows wherever you go. An umbrella policy can increase the liability limits if necessary.
  • A final coverage detail is medical payment coverage for injuries occurring on your property or in your rental by visiting non-residents. It may also cover medical expenses of another person injured by you, a member of your family, or a family pet while away from home.

It’s valuable to know your insurance coverage in case of disaster, both large and small! More details of an insurance check-up are available on the Minnesota Department of Commerce website.

Source

Minnesota Department of Commerce (2012). Annual Insurance Checkup. St. Paul, MN: Minnesota Department of Commerce.

Ways to Lower Homeowners Insurance Costs

Rosemary K. Heins, Extension Educator — Family Resource Management

March 2013

The price you pay for homeowners insurance can vary by hundreds of dollars, depending on the insurance company you buy your policy from. The Insurance Information Institute has a publication entitled "12 Ways to Lower Your Homeowners Insurance Costs." Let’s review a few of the suggestions.

Shop around — it’ll take some time but it could save you money. Talk to friends or your insurance agent. Check out insurers with the Minnesota Department of Commerce which regulates the industry in Minnesota, or other consumer guides. Get a feeling for the type of service you would get.

Raise your deductible. The deductible is the money you pay toward a loss before your insurance company starts to pay a claim. The higher the deductible, the more you can save on your insurance premium. It’s also a good idea to have the amount of the deductible, whether it’s $500 or $1,500 set aside in emergency saving in case you do have a loss.

Don’t confuse what you paid for your house with rebuilding costs. The land under your house isn’t at risk from theft, tornado, fire and other perils. Don’t include it in determining how much insurance to purchase. But it’s is a good idea to review your policy annually to make sure you have the correct coverage for your home and its’ contents.

Buy your home and auto policies from the same insurer. Some companies will discount policy costs if you purchase more than one policy from their company.

The Insurance Information Institute website is at www.iii.org and has many helpful consumer publications. Check them out and you may get more ideas that will help you save yourself hundreds of dollars and/or make sure you have the coverage you need.

Health Savings Accounts

Rosemary K. Heins, Extension Educator — Family Resource Management

January 2014

Deductibles are what the insured must pay out-of-pocket for a loss or expense before the insurance company starts paying. Good planning for emergency funds includes setting aside money for this potential need. Health savings accounts, often referred to as HSA's, are one way to set aside this expense and provide tax advantages, too.

If you are enrolled in only one health insurance plan and it has a high deductible, you probably are eligible to open a HSA. High deductible is defined as $1,250 per year for an individual or $2,500 per year for family coverage. HSA's may be available through employers, the insurer or through a bank or other financial institution.

There are benefits, in addition to helping with medical expenses, as well as limitations. You save money to avoid the shock of a large medical bill. And, money can accumulate from year to year unlike many 'flexible spending accounts' in which if you don't use the money within the year you lose it. Another plus is a tax deduction for contributions to the account. In 2014 the limit for an individual is $3,300 and for family coverage the limit is $6,550. The account will earn interest and other earnings which are not taxed when the funds are spent.

HSA's will differ so consumers need to review account disclosures for fee information, the annual percentage rate of interest and other terms and conditions. Learn more about Health Savings Accounts by reviewing IRS Publication 969 on Health Savings Accounts and other Tax-Favored Health Plans. They are designed to help manage medical expense deductibles.

Sources

“Health Savings Accounts: One Way Some Consumers Can Prepare for Medical Bills”, FDIC Consumer News, Summer 2013, www.fdic.gov/consumers/consumer/news/cnsum13/Summer2013C.pdf
Internal Revenue Service Procedure Revision for 2014 Health Savings Account Levels, www.irs.gov/pub/irs-drop/rp-13-25.pdf

 

Medical Insurance for Travelers

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

Planning for travel out of the United States can be exciting. It’s an opportunity to get a new outlook on life. But this outlook could be tarnished if you need to deal with a medical emergency. Don’t assume your insurance will go with you when you travel.

It’s very important to ask your medical insurer two questions before you leave:

  1. Does my policy apply when I’m outside the United States?
  2. Will it cover emergencies like a trip to a foreign hospital or an evacuation?

In many places, doctors and hospitals still expect payment in cash at the time of service. You can’t simply give them your insurance card and expect it will go through. If your policy doesn’t go with you when you travel, it’s a good idea to purchase a separate policy for your trip.

The Social Security Medicare Program does not provide coverage for hospital or medical costs outside the United States. Travel Medical Insurance covers costs of medical attention you may need while abroad.

Remember there is a difference between travel medical insurance and travel insurance. Travel insurance insures your financial investment in your trip. Typically it covers such things as the cost of lost baggage and cancelled flights, but it may or may not cover costs of medical attention you may need while abroad.

An excellent resource for information related to travel insurance is the US Department of State website. It contains a wealth of helpful advice for planning to safeguard your travel abroad.

Source

Bureau of Consular Affairs, United States Department of State. (n.d.) Travel.State.Gov. Washington, D.C.: Bureau of Consular Affairs, United States Department of State.

Health Savings Accounts — Tips to plan well and use this option to pay down your high deductible. Transcript and audio (2:02)

Catastrophic Health Care Coverage for Those Under 30 — This type of plan protects against very high medical costs. Transcript and audio (1:48)

Health Insurance Definitions — Consumers need to understand insurance terms to be smarter about their health insurance dollars. Transcript and audio (2:06)

Considerations in Choosing a Health Insurance Plan — Comparison shopping can save you dollars; this is even more important in looking at the various health insurance plans to choose from. Transcript and audio (1:58)

Give Yourself an Insurance Check-up — It's valuable to know your insurance coverage in case of disaster, both large and small! Transcript and audio (1:59)

Review Your Insurance Coverage Before Disaster Strikes — Be ready for disaster before it happens; check out how your property is insured.

Ways to Lower Homeowners Insurance — The price you pay for homeowners insurance can vary by hundreds of dollars, depending on the insurance company you choose. Transcript and audio (1:56)

Home Insurance Claims — Provides an overview on making claims on your home insurance policy.

Medical Insurance for Travelers — Don't assume your insurance will go with you when you travel. Transcript and audio (1:47)

List It or Lose It: The Case for Household and Property Inventory — Tips for doing an inventory of your personal property.

Other Recommended Resources

Meeting Your Insurance Needs — Insurance is the primary way you protect yourself against financial loss caused by illness, accidents, and other destructive or damaging events.

Disaster Recovery — Offers families new or additional resources following a disaster. Includes the Recovery After Disaster: The Family Financial Toolkit.

Dollar Works 2 — Teach others how to manage their personal finances and make sound decisions about money. This comprehensive curriculum has a unit on Managing Risk with Insurance.

InsuranceMinnesota Department of Commerce — The "go to" source for insurance information for Minnesotans. Information on consumer alerts, auto and leisure, home and property, medical and health, and more.

Insurance Information Institute (I.I.I.) — Organization that works to improve public understanding of insurance, including what it does and how it works. Includes resources in Spanish.

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