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1 year ago · by · 0 comments

Copay and Coinsurance: How Are They Different?

Health insurance has become increasingly complicated and difficult to understand. Every medical insurance plan comes with a copay, coinsurance, deductible, premiums, and a list of rules and often little explanation. To further complicate matters, we all know that there are more insurances than health insurance. We also have car insurance, life insurance, pet, travel, etc. The difference with health insurance, however, is that health insurance can become the one thing that stands in the way of you and a healthy future. It is by far the most significant protection for anyone to have, and it is even more important that we have access to the tools that help us better understand our benefits.

Healthcare can be unpredictable and extremely expensive. The idea is that the insurance shares the cost with the insured, with another insurance plan, or a few other variations. Each plan has their set of rules, and they work together depending on that type of policy.

How Is Cost-sharing Defined?

To understand how it all works together, you must first know the definition of each term.

  • Premium

    Your premium is the amount you pay each month to have the insurance. This amount is the same amount each month. It is the fixed monthly cost, and you must pay it whether or not you use your insurance in a particular month. If you miss paying your premium, you risk losing your coverage. For those of you that work for companies that offer insurance plans, your employer will usually cover some or all of your premium.

  • Deductible

    Your deductible is the amount that you pay before your insurance starts to pay. So, if you have a $1000 deductible, then your insurance will only kick in once you have met that amount. For instance, if it costs you $250 per doctor visit, you would have to go four times and pay the full amount before the insurance kicks in. Once you paid that amount in full, you would then only pay your copayment or use your coinsurance, which we will explain in the next sections. Deductibles are also given to prescription medication and are often a separate deductible. If your prescription deductible is $500, you will pay the full cost of your prescriptions until you have paid $500. After that, you would only pay your copayment or use your coinsurance.

  • Copay

    Your copay is a rate you pay when you go to the doctor. It is the payment made at the time of care. As an example, you may pay something like $25 to the doctor when you visit your primary care doctor, $15 for generic medication at the pharmacy, or $250 for an emergency room visit. You pay these fees at the time of treatment or pick up your prescription.

  • Coinsurance

    Your coinsurance is the amount of the medical bill that you would pay that is not covered by your health insurance after you have met your deductible. An example would be this, if you have a $2500 deductible and a 20% coinsurance, then you would pay $2500 first, and once you have paid that, you then pay 20% of the bill, and the insurance covers the remaining 80%. Not everything requires a coinsurance. Many plans will cover 100% of disease management and preventative care services once you have met your deductible. It is usually the less common services that divided with coinsurance, such as surgery.

  • Out-Of-Pocket Maximum

    Your out-of-pocket maximum is the most you can be responsible for in one year’s time.  Once you have paid your out-of-pocket maximum, your insurance will cover 100% of all other bills, and your coinsurance goes away. As an example, under the Affordable Care Act, policies sold to individuals in 2016 were limited to a max $6,850 for a single person and $13,700 for an entire family. This varied for people that used plans covered partially or entirely by their employers.

Understanding In-Network vs. Out-Of-Network

There is another element to copays and coinsurances. Based on the type of policies that you choose, your insurance provider will have a list of in-network providers. Everyone else would be considered an out-of-network provider. The doctors that are out-of-network are either more expensive than in-network providers or will not have coverage at all. Why? Take a look at our explanations below.

  • What is a Network?

    A network is the group of physicians and providers who have agreed to accept your health insurance policy. These agreements that are negotiated by the health insurers, hospitals, and doctors and give the insurance providers lowers rates than they offer other insurers who are not on their network. If a physician is on your network, that means that your insurer is getting a lower rate from them than you would without insurance and lower than other insurance providers would who have not negotiated a deal.

  • In-Network

    An in-network provider is a healthcare provider that your insurer has negotiated that lower rate with and who will accept your insurance. In-network providers are more often less out-of-pocket cost for you and whatever payment you make to them, will count towards your deductible.

  • Out-Of-Network

    An out-of-network provider is a provider that does not work with your insurer and does not offer your insurer a discounted rate. These providers are often not covered or have a much higher out-of-pocket cost for you. Also, many times your insurer will not count your out-of-network payment toward your deductible.

Understanding Policy Types

Health insurance policies come with many different cost-sharing options. People shopping for health insurance will face choosing between plans with low premiums and high deductibles, or high premiums with low deductibles and smaller out-of-pocket limits. These varying types of policies are called HMO, PPO, EPO, POS, and there are a few others.

What are the differences in these policies and how do you know if which is right for you? Let’s look at the different plans

  • HMO (Health Maintenance Organization)HMO

    HMO plans are plans that require you to use a doctor that is on your network, except emergency situations. You would use the predetermined in-network doctors provided by your insurance to see your primary care doctor. If you need to see a specialist outside of your primary care doctor, you will be required to get a written referral from your primary care doctor before seeing the specialist; otherwise, your insurance will not cover the service.

    For people looking for lower premiums, lower out-of-pocket costs, and are willing to always work with their primary care doctor to facilitate all other care; an HMO plan is for you. Something to consider when choosing an HMO provider, are the number of in-network doctors in your area. You do not want to end up with an HMO plan that has limited doctors in-network where you live.

  • PPO (Preferred Provider Network)

    PPO plans allow policyholders to see any doctor in-network or out that they want. They do not require a written referral from a primary doctor to see specialists and have it covered by insurance. The difference with these plans is that, although you can see both In-network and out-of-network doctors, in-network doctors are less expensive. These plans are perfect for people that do not mind higher premiums and want more freedom in choosing their treatment providers.

  • EPO (Exclusive Provider Organization)

    Like HMO plans, EPO plans require that you choose a healthcare provider that is in-network, with the exception of emergencies. The biggest difference between EPOs and HMOs is that EPOs do not need a referral from your primary care doctor to see a specialist that is in-network, and HMOs do. This plan is perfect for people that want lower out-of-pocket costs, who don’t mind using in-network providers but do want to have a written referral to see doctors outside of their primary care physician.

  • POS (Point of Plan Service Plan)

    POS plans are plans that allow you to use in-network and out-of-network providers, however, you must get a written referral to see an out-of-network provider. Even with a written referral to use an out-of-network provider, the in-network provider will always be less expensive. This plan is perfect for people that want more freedom in choosing a healthcare provider, but don’t mind using a primary care doctor to coordinate their care.

 A Checklist for Choosing Your Next Health Insurance Plan

  • Start by finding your marketplace and comparing plans side by side.
  • Decide if you prefer increased coverage with higher premiums, or low premiums with higher out-of-pocket costs.
  • Choose whether HMO, PPO, EPO, or POS is best for you and your family
  • Double check and remove plans from your options that exclude your primary care physician or that do not have many in-network doctors near you.
  • Remember to make sure that the plan you choose will cover your current regular care and necessities, such as prescriptions and specialists.

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1 year ago · by · 0 comments

Top 10 property and liability claims for small businesses

This article first appeared at Wolfe Ins Group and was written by Caterina Pontoriero

Most small business owners probably worry about theft, property damage, and fire risks affecting their businesses. While these are common claims for small business owners, perhaps they should be more worried about customer injury, product liability, and reputational damage.

The Hartford analyzed small business claims from more than one million property and liability policies over five years, and found that the costliest claims aren’t always the most common.

For example, the most common claim — burglary and theft — is actually the least expensive claim in The Hartford’s ranking of the 10 costliest claims. While 20% of small business owners were impacted by theft and burglary in the past five years, the claims only cost them, on average, $8,000. That isn’t much when compared to the costliest claim, which averages $50,000 per claim.

Here are the top 10 property and liability claims for small businesses:

1)Burglary and theft: 20% (Percentage of all small business claims)  Cost: $8,000

When hiring employees, conduct background checks. Protect your business by ensuring your building has adequate devices installed to control unauthorized entry, fencing and gates around the building and parking areas, and sufficient exterior and interior lighting.

2) Water and freezing damage: 15%  Cost: $17,000

Maintain proper indoor temperature during periods of extremely cold weather, even when away. Make sure your key employees and personnel know the location of the water shut-off valve. In the event of winter weather, clear roofs and overhangs of excessive snow and ice.

3) Wind and hail damage: 15%   Cost: $26,000

In the event of a storm, know your business property. Treat and maintain trees that can blow over. Protect windows from flying debris by walking the grounds and moving objects inside that could become projectiles in high winds, and anchor any equipment stored outside that could be moved by high winds.

4) Fire: 10% Cost: $35,000

Fire claims are ranked in the top five of both the most common and costly claims. The average cost for a fire claim is $35,000, impacting 10% of small business owners in the past five years.Prevent fire from damaging your business by testing all fire and life safety detection and suppression equipment per local and national fire codes. Protect your employees by establishing or updating your emergency preparedness plan, which should include fire evacuation routes. Mark the routes clearly and drill employees in using them.

5) Customer slip and fall: 10%  Cost: $20,000

6) Customer injury and damage: >5% Cost: $30,000

7) Product liability: >5%   Cost: $35,000

8)  Struck by object: >5%  Cost: $10,000

9) Reputational harm: >5%  Cost: $50,000

Though less than 5% of small businesses file claims for reputational harm, it is the costliest claim they face. A claim payout  can run much higher if a lawsuit is involved, and can average more than $75,000 per case to defend and settle. The internet can cause your business reputational harm. Make sure to have permission to post photos or other content on your website to avoid copyright infringement, and avoid criticizing a competitor publicly online or to customers.

10) Vehicle accident: >5%  Cost: $45,000

Screen employee driving records before allowing them to use their car for business purposes, and do not provide incentives to drivers for speedy deliveries.  Wolfe Insurance Group is always available to answer any questions or assist with any insurance related matters.

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1 year ago · by · 0 comments

Do I Need Life Insurance?

This article first appeared on credit.com and was authored by Brittney Burgett.

When people find out I work at a life insurance startup, I almost always get asked, “How do I know if I need life insurance?”

Fortunately, it’s a pretty simple answer: you need to strongly consider life insurance when you have people in your life who rely on you financially.

If you were to die, and the people you love would be left in a precarious financial situation, such as being strapped for cash to pay the mortgage, putting the kids through college or covering basic day-to-day expenses, then you should strongly consider life insurance.

It’s not pleasant to think about death because, after all, we have so much left to do in our lives. However, the unexpected can occur, and it’s important to plan for it. (Disclaimer: Don’t worry, planning for death doesn’t make it happen sooner.)

Life insurance should be part of that contingency plan.

How Does Life Insurance Work?

Life insurance helps ensure that your loved ones are protected if the unexpected occurs. You pay a monthly premium to keep your policy in good standing, and the insurance company pays a guaranteed amount of money (a death benefit) to your beneficiaries as a financial cushion at the time your family would need it most.

This payout could be used toward covering funeral expenses, the mortgage, putting the kids through college or even invested to potentially accrue added value over time.

When Do You Need Life Insurance?

The most common life stages that trigger a need for life insurance are when you get married and have children. That’s because you’re building a life and family with multiple people who likely rely on your income to help pay the bills.

There are other scenarios, though, where life insurance can make sense. For example, Americans are more than $1 trillion in student loan debt. If you are among those Americans, you need to ask yourself, “What would happen to my debts if I died?” For federal loans, they’re most likely absorbed by the government. For private loans, any co-signers you have would likely be stuck paying them off. The same goes for any other co-signed debts you have.

It’s important to know whether or not co-signed debts will be left behind to your loved ones to pay off if you die. If you think that debt burden is likely, a life insurance policy could help pay them off.

If you’ve determined that you need life insurance, then the real answer to when you need it is “now.” Life insurance protects you against the unthinkable, and the unthinkable can happen at any time. Plus, a policy is more affordable the younger and healthier you are.

How Much Life Insurance Do You Need?

The exact amount of life insurance is part art, part science.

A general rule of thumb among financial experts is at least six-to-ten times your annual income. However, you know your financial situation best – i.e. how much liquid savings you have or don’t have, what kind of assets could be accessed in an emergency, etc. That may necessitate a larger or smaller benefit. When deciding on a policy amount, consider:

  • Mortgage payments
  • Any co-signed debts
  • Day-to-day expenses
  • Putting the kids through college
  • Funeral costs, medical bills or any other final expenses

Term vs. Permanent Life Insurance

There are two main types of life insurance: permanent and term. Permanent life insurance provides coverage for a lifetime versus a term length. Permanent life insurance comes in two main forms, whole and universal, and has a cash value component that can increase or decrease over time. You can borrow or withdraw money from the policy’s cash value and spend it as you wish. However, loans and withdrawals will impact the death benefit amount.

Term life insurance is characterized by its determined length (term) of coverage — typically 10, 15, 20 or 30 years. Should you die within that term length, your beneficiaries will receive a lump sum payment. Monthly payments for term life insurance are more affordable than permanent policies. For example, a healthy 35-year-old woman could purchase a 20-year, $500,000 policy for about $19 per month. A whole life insurance policy for $500,000 for that same woman would likely cost about $400 per month. Once you reach the end of the policy term length, coverage expires or you can work with your insurer to extend coverage. The premiums will be higher, though, because you’ll be older and potentially less healthy. (Full disclosure: Haven Life, the startup I work at, only sells term life insurance.)

Choosing a Life Insurance Provider

When comparing providers consider the following:

  1. Check the rating of the provider. A company such as A.M. Best does the homework on an insurer’s claims-paying ability and record, to help determine whether the provider is considered reliable and in good financial standing. We’d recommend providers rated A+ or better.
  2. Choose a policy with level premiums and a sufficient duration. When it comes to term life insurance, level premiums mean that your monthly costs will not go up over the length of the term. And your term duration should be long enough to get you past any major expenses, such as a mortgage or when the kids are finished with college.
  3. Pick a process. There are two main ways to buy a policy: through an agent or buying life insurance online. At Haven Life, we’re partial to online because that’s what we offer, and it allows you to get covered immediately and on your own time. But, some people prefer the help of an agent through the entire process, if that’s the case, the traditional method might be a better option for you.

Planning for death can be unpleasant – so many of us put it off. You shouldn’t. If you have loved ones who rely on your earnings, life insurance is a responsible way to help ensure they are financially cared for after you’re gone. Planning for this sooner, rather than later, provides your family with necessary financial security and gives you some much-needed peace of mind.

 

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