Health Insurance For People With Chronic Illness

One of the growing problems in America's health care system is access to health insurance.  It is estimated that 30 million Americans are uninsured.  This problem is particularly acute for individuals who suffer from illnesses or disabilities and do not qualify for qovernmental insurance such as Medicare and Medicaid.  Since sick people are likely to use more health care services, they are more expensive to insure.  insurance companies may refuse to insure them because they are "bad risks," or may charge them more in premiums.  Ironically, those who need health insurance the most often have the hardest time finding it.  It is important to know what types of health insurance are offered, and what the strengths and weaknesses are of each.  Following is a discussion of the current major types of private health insurance available.

A. Employment-Based Group insurance

The most common way of accessing health insurance is through employment.  Many employers offer group health insurance benefits to their employees.  These benefits are usually available to spouses and children of employees.  Some employers pay the entire premium for their employees' coverage; others require a contribution from the employees' paychecks.  In general based insurance is the most affordable type of coverage.

If a sick or disabled person is well enough to work, or if the spouse of an ill person can work, employee health benefits can help insure the cost of medical care.  However, such plans often limit the coverage they offer.  Some group plans may refuse to insure a sick person to prevent an increase in premiums owed by the group.  Other employer plans may impose pre-existing condition exclusions.  That is, they will not pay for the medical care of an illness which was diagnosed or treated prior to employment.  Other plans impose waiting periods during which an employee pays premiums but is not insured.  In addition, group plans rarely pay the entire cost of medical care.  A standard "major medical" indemnity plan pays 80% of medical care costs after an annual deductible paid by the insured person.

An increasingly popular model of employment-based health care is the HMO model.  HMO's, or health maintenance organizations, offer comprehensive health care in return for a monthly fee.  In additoin, there is usually a copayment made by the insured at the time he or she used a service.  HMO's offer the advantage of "one-stop shoppong" for a person's health care needs.

HMO's try to contain the cost of health insurance by "managing" an individual's care.  Usually medical care services must be approved by the insured person's primary care doctor within the HMO.  Most people welcome the oversight provided by a doctor who is well acquainted with the state of their health.  However, on occasion this has led to complaints that HMO's arereluctant to approve necessary care.  Also, the plan will usually not pay for services provided by doctors and hospitals who are not in the HMO.  Such "out-of-plan" services must usually be approved in advance by the HMO.  If a sick or disabled person wants to get specialized treatment from a hospital or doctor outside of the HMO, his or her insurance may not pay for it.

A third type of group insurance plan is the PPO, or "preferred provider plan."  PPO's allow an individual to obtain medical care from an approved list of providers at little or no cost beyond premium payments.  If, however, the insured person goes to a provider not on the PPO's list, he or she must pay a higher percentage of the cost of care.  Thus, there is a financial incentive to PPO list.

The success of a PPO depends on the number and variety of providers on its list.  An individual should ask to see the names, addresses and specialties of all PPO providers prior to enrollment.  If there are enough providers in the person's geographic area who can treat his or her medical problems, a PPO may be a wise choice.

B. Non-Group Health insurance

Another source of health insurance for sick or disabled individuals is generally referred to as "non-group."  This type of health insurance is offered on an individual basis rather than to a group.  Like most indemnity plans, it usually pays a percentage of the cost of care after a deductible amount.  Because the cost of administering many individual policies is high, non-group insurance is often expensive.
Non-group health benefits are usually available through a state Blue Cross Blue Shield organization.  Because "the Blues" are frequently non-profit organizations, they may offer non-group benefits at less than market rate.  In addition, certain HMO's and commercial insurance companies offer non-group benefits.

Non-group insurance often has waiting periods and pre-existing condition exclusions tied to its coversage based on their medical condition.  However, it is frequently the only health insurance available for non-poor, unemployed individuals.  This type of health insurance is frequently used for short periods of time by individuals who are between jobs.

C. Individual Disease Policies

Many insurance companies offer health insurance for coverage of a particular disease, such as cancer.  Or, coverage may be offered for a small number of diseases.  Such policies do not pay for the cost of medical care for an illness other than the ones specified in the policy.

Individual disease policies are not generally considered to be a good buy.  It is difficult to predict in advance what illness an individual may contract.  In addition, most insurance companies will not issue health insurance for a particular disease if the person is already suffering from that illness.

D. Long-Term Care insurance

A relatively new type of insurance product that is popular with shoppers of life insurance is long-term care insurance, which pays for the cost of extended illnesses which do not require a hospital level of care.  These policies may be sold on an individual basis or as part of a group insurance plan.  Usually they insure the cost of nursing home care or a combination of nursing and home health benefits.  The cost of such coverage is tied to the age of the purchaser.

Because long-term health care is expensive, premiums for long-term care insurance are high.  Insurers lessen the cost of premiums by providing partial payment of long-term care costs, imposing waiting periods or elimination periods during which an individual is not covered, excluding care related to speific illnesses such as Alzheimer's Disease, excluding pre-existing illnesses, or requiring a period of hospitalization as a precondition for coverage.  In addition, premiums are often pegged to increases in the cost of care, which can result in large increases after a policy is purchased.  These policies should only be purchased if the individual has carefully examined what the policy does and does not cover, and understands what premium increases may occur.

None of the current private insurance products are going to provide complete coverage for people with chronic illnesses.  The cost of modern health care has become too expensive for that.  Individuals seeking to learn more about insurance options available in their area should contact a local insurance agency.  Or, they should contact their state government's insurance division for imformation about health care coverage.  Hopefully, they will get enough information to purchase insurance that will provide coverage suited to their medical needs at a price they can afford.

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