Understanding the Basics of Health Insurance For Your Family

As a result of my husband being self-employed, when it came to health insurance, we were always covered by my employer. But when we had our first child–and decided that I would stay home–we suddenly found ourselves having to navigate the complicated waters of health insurance. What exactly did we need? And what is a deductible? These were questions that I didn’t think of when all I had to do was fill out a form with my past employer. It gets confusing, and in today’s world, where health insurance is a perk that is being cut in order to save jobs, many people are having to figure out what it all means. Breezy Mama enlisted the help of Eric Osborn, owner of Osborn Insurance Services, to spell it out. –Alex

Let’s start with the basics, what exactly is a deductible?
It is the amount of covered expenses that must be paid by the subscriber before coverage begins and is typically shared by the insurer and insured. Deductibles are on a calendar year basis and start over January 1st.

What is the best way to figure out if I should go with a high deductible and low monthly payments, or vice versa?
First of all, the higher the deductible, the lower the monthly premium will be, in most cases. It will depend on a couple different variables including what the average medical bills a person has experienced in the past year and the amount of money that an individual or family is willing to pay out of pocket until the insurance kicks in on an annual basis. If a person is expecting high medical expenses in the foreseeable future, it might be a good idea to go with a plan that has a low deductible and higher premium. If a person is relatively healthy, I would recommend a high deductible plan.

Can you explain the difference between a HMO and PPO?
A Health Maintenance Organization or HMO is licensed by the state to provide care for enrollees by contracting with specific health care providers to provide specified benefits. Many HMOs require enrollees to see a particular primary care physician (PCP) who will refer them to a specialist if deemed necessary. It is an alternative to commercial insurance that stresses preventive care, early diagnosis and treatment on an outpatient basis.

A Preferred Provider Organization or PPO, is a network or panel of physicians and hospitals that agrees to discount its normal fees in exchange for a high volume of patients. The insured individual can choose from among the physicians on the panel.

How do you make sure if your doctors accept the plan, especially with a HMO? If my doctor doesn’t accept a HMO plan, what is your suggestion on what to do?
You can either ask your Dr. if they are contracted with the specific insurance carrier you are interested in or look online on the insurance carrier’s website. If your Dr. doesn’t accept an HMO, then you need to find another Dr. or choose a PPO.

What is a HSA? I don’t contribute to a HSA because it seems confusing and difficult. Is it?
Health Savings Accounts (HSAs) are tax-exempt accounts where funds grow to pay for medical expenses. They were created to help give control back to consumers and lower healthcare costs. HSAs provide a financial incentive for consumers to select a High Deductible Health Plan (HDHP). HDHPs have lower monthly premiums than traditional plans. The HSA/HDHP combination provides consumers with more incentive to shop carefully for healthcare services.

It is not confusing, just a change in thinking. For example, if you have ever had an FSA (Flexible Spending Account) through your employer where you were able to have your employer deduct a specified dollar amount to be deducted from your paycheck on a pre-tax basis and you could use that money to pay for eligible medical expenses such as co-pays, prescriptions and contact lense solution. You are issued a debit card to pay for those expenses whereby the money comes directly out of your account on a tax-free basis. An H.S.A. works the same way.

What are the basic things a family of four needs?
Depending on the medical needs of a family will determine which plan to go with. Most plans cover the basic coverage, including office visits, prescriptions and hospitalization. Depending on if you are still planning on having more children, you would want to be protected with maternity coverage. Not all plans cover maternity.

What are some tips to figure out what is the best plan for me? For my husband and kids?
Are you taking any prescriptions? Are they Generic or Brand Name? Do you need maternity coverage?

An entire family doesn’t need to be on one plan–what are your tips for thinking outside the box?
This can be a misconception that you would save money by going on the same plan. Since men, women and children have different needs, it sometimes makes sense to go on separate policies that cater to their specific needs. For example, there is no need for a male or children to have maternity coverage.

If a family is done having kids, what are the cost savings? What type of plan should we look for?
You should look for a plan without maternity coverage. Cost savings can be 20-30% without maternity coverage for a family plan.

Lately I’ve heard some good things about Kaiser, what makes them different?
More people are choosing Kaiser for cost savings and simplicity. For example, a member would be able to see the Doctor for a checkup, get their blood examined and buy their prescriptions all under one roof.

About Eric Osborn: I began my career in the Insurance Industry over 8 years ago in the Employee Benefits arena as well as helping individuals and families with their health and life insurance needs. I became an insurance agent through a friend of mine who was also a broker. I enjoy helping people and giving them advice on which is the best way to go for them, even if it is not financially beneficial to our agency. We believe in assisting our clients with all of their insurance needs, including claims and billing. Our goal is not to just “insure” you today, but to provide you with value added services that will give you the very best protection for years to come. We are located in Huntington Beach, CA and service all of Orange County and surrounding areas.

If you have any more questions for Eric, he can be reached at: Osborn Insurance Services, 16541 Gothard Ave. Suite 202, Huntington Beach,  CA 92647.Tel: (714) 698-1221 Fax: (714) 459-7034

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