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Making the Leap to Your Own Insurance Coverage

Tags:  Medical Insurance, Life after college

Anyone who is in school, looking for a new job or just between jobs right now, knows the risk of being without sufficient health insurance coverage. That's why it is so important to ensure you have a proper health care plan either through school, your parents, your former or current employer, or in an individual plan.

A national study released this year found that more than half of all young people have gone without health insurance at some point in the past five years - including 75 percent of those who now have some level of medical debt. In fact according to 2006 U.S. Census Bureau data, 30 percent of 18 to 24 year olds have no health insurance at all.

However, if the idea of purchasing good health insurance coverage for yourself is intimidating – especially because costs can be so high – here are some things you might want to keep in mind as you look at your options.

Insurance Options

It all depends on your current status. If you are currently employed full-time, your employer is likely to offer a variety of options including medical, dental, life and vision insurance.

While your first thought might be to go with the least expensive plan, after all, you're young and healthy, you're better off reviewing what each policy offers to determine which one provides you the type of coverage you really need. Know that you will have the option at a future date to make changes during your company's open enrollment period. And if you need additional assistance in making the right decision, be sure to speak with your health plan rep or human resources department.

If you only work part time or are currently unemployed, you may find that you need to cover your health care needs with an individual plan. If you were working full-time and have been laid off, you might want to investigate continued coverage with your employer utilizing COBRA, also known as the Consolidated Omnibus Budget Reconciliation Act of 1985 (see the companion article What Everybody Ought to Know About COBRA). It still comes out of your pocket; however, in many instances the coverage warrants the cost.

Another alternative might be short-term medical insurance which is designed for people who cannot afford permanent health insurance. Coverage is offered for one to six months which just provides you interim coverage and allows you to drop the plan without penalty when circumstances change.

Types of Insurance

This is the most confusing part of selecting insurance. But you should know there are basically two types of plans: indemnity and managed care.

The difference is that indemnity plans – also known as fee-for-service plans -- allow more choices regarding doctors, hospitals and other health care providers than managed care plans and they pay their share of the costs of service after they get the bill.

On the other hand managed care plans – generally in the form of PPOs (Preferred Provider Organization), HMOs (Health Maintenance Organization), and POSs (Point of Service plan) – have agreements with specific doctors, hospitals, and health care providers to provide a certain group of services to members at a reduced cost. There's generally less paperwork and lower out-of-pocket costs.

Important Terminology

There are a lot of words that get bandied about when you're dealing with insurance carriers, brokers and doctors, so it's wise to understand what everyone is talking about.

Terms like deductible – that's the amount you have to pay before the insurance covers the costs – or EOB (Explanation of Benefits) – which is the insurance company's written explanation of what they paid for your services and what you still owe – can be confusing. Be sure you ask questions, lots of them, to get the right type of insurance coverage for your particular needs.



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