Financing Health Care
- Created on January 18th, 2006
- By Journey to Wellness
Stephanie was born two months prematurely and spent the first two weeks of her life hooked up to a respirator, heart monitor, feeding tube and IV in a neonatal intensive care unit. Though her parents, Veronica and Daniel, both had health insurance through their companies, they were about $60,000 in debt by the time they brought their newborn home.
The couple didn’t qualify for Supplemental Security Income, children’s catastrophic illness program or other programs because they both worked and made too much money. As a result, they went into debt and almost lost their house. Things didn’t get better. Stephanie was developmentally delayed, and it took her parents one and half years to resolve her first physical therapy claim, even though it was listed as a covered expense in both their employee handbooks.
To make matters worse, Veronica was injured in a car accident, and Daniel’s company lowered the amount of health insurance it covered, leaving him with insurance payments nearly double that he’d been responsible for previously.
By the time Stephanie was two, the struggling couple was nearly bankrupt.
It didn’t have to be this way, but Veronica and Daniel didn’t know their options.
Review the options below on ways to cover health care costs:
Private Health Insurance
The term "health insurance" covers many things. It can mean anything from paying for emergencies to going to the doctor or dentist for regular check–ups. Some insurance companies don’t place restrictions on which health care providers its enrollees see. Others provide a list of physicians their plan covers. Some plans pay for basic or emergency care only, while others pay for everything from doctor visits to prescription medicines. Premiums vary by plan, but the general rule of thumb is the lower the monthly payments, the less the plan will cover.
There are four types of health plans––HMO, FFS, PPO and POS.
As a member of an HMO, a patient selects a primary care physician from a list of doctors within that HMO’s network. Before visiting a specialist, like a gynecologist or a cardiologist, patients must first see their primary care physician in order to get the specialist visit covered by their HMO. Advantages: low co–payments, little paperwork and coverage for many preventive–care programs. Disadvantages: members must choose a primary care physician and can only see those who are in the network.
Under Fee–For–Service (FFS) plans, also called indemnity health plans, patients pay a set amount of the cost of health care services, and the insurance company pays the rest. Advantages: enrollees can choose their own physicians and hospitals, and they can visit a specialist without getting pre–approvals. Disadvantages: Enrollees have to pay a deductible and still pay part of their health care costs. They may have to pay up front for medical care, then be reimbursed later by their insurance company. Insurance companies only cover what their plan defines as "reasonable."
Under a PPO patients receive discounted rates when they see a doctor who is within the PPO’s network. If they see a doctor outside the network, they have to pay a percentage of the doctor’s fee. Advantages: co–payments are usually low (about $10) for routine visits. There is no referral requirement to see a specialist. Disadvantages: If patients see a doctor outside the PPO’s network they may have to pay the whole bill and then be reimbursed for the insurance company’s percentage later. They may have to pay a deductible if they go outside the network.
Under a Point of Service (POS) plan, there is a network of doctors and hospitals patients can use and have all health care costs paid for by the insurance company. Advantages: Depending on the POS’ rules, enrollees may be able to see doctors outside the network and still have a percentage of the cost paid by the insurance company. POS plans tend to offer more preventive care and well–being services. Disadvantages: Enrollees must have a primary care physician. And though they may choose to see a physician outside of the network, they have to first get permission from the insurance company, are likely to fill out more paper work and receive only a small reimbursement.
Medicare is a two–part, federally funded program that offers health insurance to adults who are 65 years or older and people of any age who suffer from kidney disease and certain disabilities.
Part A helps pay for necessary medical care and services given by Medicare–certified hospitals, nursing facilities, home health agencies and hospices. It does not cover doctor visits, prescription drugs, dental care, cosmetic surgery, routine foot care, glasses or hearing aids. It is free to qualified individuals.
Part B helps pay for doctors, outpatient hospital care, ambulance transportation and a variety of tests and services. It costs $50 per month. The state may pay part of the fee of low–income patients. Part B pays 80 percent of most covered services.
Medicare enrollment is automatic for both parts when Social Security payments begin. An information packet is sent out three months before the 65th birthday. People 65 or older who have not received the packet should call (800) 633–2273. African–Americans who are not 65 but who fall under one of the other terms of eligibility should contact their local Social Security office.
Medicaid is a federally funded health insurance program for low–income Black and other families. Medicaid pays for health care costs, including routine doctor visits and eye care. There is no monthly premium, but recipients may have to pick up a portion of the cost of services. Eligibility varies by state. To apply, contact the local Social Security office or the Department of Social Services (800) 772–1213.
Alternative Health Insurance
Alternative plans may include low–cost or free prescription medication programs and free or low–cost health care services.
Many pharmaceutical companies offer prescription medicines free or at reduced cost to low–income African–Americans and other people with high prescription drug costs. A physician has to contact the drug companies, but patients will need to fill out the application forms. Physicians should call (800) PMA–INFO for more information. These programs are usually only available to people who have long–term illnesses and high prescription drug costs.
Many facilities throughout the United States offer free or low–cost emergency and regular health services. These services are for people who cannot afford health insurance and do not qualify for Medicaid. These facilities include community health care centers, which provide low–cost or free services for patients who qualify, and Hill–Burton facilities, hospitals that see patients who might not be able to afford their services. To find a Hill–Burton hospital, call (800) 638–0742.
Long–Term Care Insurance
Medicare, Medicare supplemental policies and standard health insurance policies generally don’t cover the costs of long–term care services provided in settings such as nursing facilities or assisted–living residences. Long–term care insurance can protect people from these expenses. Most policies require a licensed health care practitioner to write a plan of care. Some insurance companies offer a case manager to determine if a person qualifies for benefits. And many policies require a policyholder to have a cognitive or physical impairment to qualify for benefits. Long–term care insurance premiums are based on age at the time of purchase, so the younger the policyholder is when purchasing a policy, the less expensive it will be.
Flexible Spending Plans
Introduced in the ’80s, flexible spending plans (FSAs) set aside money in a designated account through payroll deductions; enrollees pay no income or social security taxes on this money. When they incur medical expenses not covered by private insurance, they are reimbursed from this designated account. With FSAs, the higher the tax bracket, the more money saved through these accounts. Any money not spent from this account by year’s end is forfeited. FSAs cover common health expenses, like general visits, contact lenses and contraceptives, but they also include other expenses, like acupuncture, removing lead–based paint from a home, car expenses while driving to appointments, massages, weight–loss programs and sterilization.
Black Americans with high health care debt can also get their hands on cash a few other ways, including secured or unsecured loans, surrendering or borrowing against life insurance policies and reversing mortgages. Usually, funding is available immediately, but eventually will have to be repaid.