Talk of “health insurance reform” is everywhere these days, but all the terminology involved can be quite confusing. If you feel you need a bit of a lesson on the definitions of healthcare insurance reform terms, the following may help:

Fee for Service – this is how the doctors get paid. Each service the doctor provides has a specific fee; this “fee for service” healthcare model has been criticized by those advocating healthcare reform.

Public Option – a proposed government choice for healthcare insurance. This is a part of the larger bill to overhaul the healthcare system that President Obama proposed in his first year of presidency.

Insurance Exchange – the Obama administration’s proposed way of helping with health insurance competition and health insurance reform. The new program is a key component in providing millions of uninsured American with health insurance.

Government Affordability Credits – credits being used to help Americans afford healthcare coverage in the health insurance exchange. The affordability credits are a way to help individuals afford the cost of mandated insurance.

Interstate Insurance – the selling of insurance across state lines. Congress has proposed interstate insurance since 2005; it is still a strong selling point for changing how and where Americans can purchase their health coverage.

Mandated Health Insurance – the requirement to purchase health insurance. This term has been used most often in the new health insurance reform legislation put forth by the Obama administration.

Pre-existing Conditions – having health issues prior to shopping for insurance. This makes finding an affordable policy a difficult task for many Americans.

As a business owner, the level of insurance coverage you obtain is completely up to you; you, of course, will want to be sure you are adequately protected, while not paying for insurance that has no relevance to your business.

Take into consideration the following when deciding on the best coverage for your unique business:

Size:

Often, businesses will begin small – you may even have started your business from your home or garage. When entrepreneurs work from home, they often assume that their business assets will be protected by their homeowner’s policy; this is not, however, always the case. You may want to consider looking into “work-from-home” insurance policies. This type of insurance will be tailored to small, start-up businesses and have the basic level of asset and liability insurance. These policies are usually quite inexpensive.

Be sure to review your policy as your business grows to be sure you have the coverage you need. If you employ someone, your liability level increases; there is always a risk for human error, so you need to protect your customers as well as yourself and your employee(s). Workman’s compensation insurance is legislated for full-time employees in most states.

Type:

Businesses in different industries will carry varying levels of risk; naturally the insurance coverage should be tailored accordingly.

A good example is restaurants and bars: They have high volumes of people come through each day meaning that they need to have insurance that will cover equipment, food, customer and product liability, workman’s comp, and property insurance at the very minimum.

A manufacturing business won’t need to have food spoilage coverage, however they carry greater risks in terms of property, equipment and product liability as well as higher workman’s compensation risks. They would need more insurance in these areas, than, say, a completely service-oriented business such as a cleaning service.

Assets and Perceived Risks:

Consider the following two factors to determine the level of insurance you need:

Your assets – you’ll want to ensure you have your assets protected so you can continue to generate an income should your business have difficulties. This type of insurance is called business interruption and shouldn’t be overlooked.

The risks – the industry of your business or the region in which you conduct business may be susceptible to certain risks; find information from local industry associations or colleagues to help assess your insurance needs.

Knowledge of Insurance Terminology Is Key

INSURANCE TERMINOLOGY YOU NEED TO KNOW:

Premium: this is the amount you pay to the insurance company each month to keep your coverage.

Co-payment: widely termed “co-pay,” this is the specific amount of money you are required to pay to the provider when you receive services. Many plans require a co-pay for office visits and prescription medications.

Deductible: this is the annual amount you will be obligated to pay out-of-pocket before your insurance company will begin to pay for any of your medical expenses. You typically need to meet your deductible for specialty care, hospital and emergency services. Once you’ve paid this amount, the insurance company will pay the balance at a set rate, often 80/20 (you are responsible for 20% of the charges above the deductible amount and the insurance company will pay the other 80%).

Co-insurance: you are obliged to pay this for medical services after you have satisfied any deductible or co-payments required by your insurance plan. Again, if you consider a plan that has 80/20 co-insurance, the insurance will pay 80%, you will pay the other 20%.

Maximum Out-of-Pocket Costs: this is in place to set a limit on your annual financial liability; once you have paid this maximum (the total of your deductibles, co-payments, and co-insurance costs combined), the insurance company will pay the full charges of your medical care rendered that year. Keep in mind, your monthly premium does not contribute to this amount.

Find out more about these terms and more at: ehealthinsurance.com

Getting to Know the “Lingo”

When you shop for a new health insurance plan, you may feel a bit challenged by health insurance terminology. In order to shop smart, learn the differences between the top four kinds of individual and family plans available:

PPO

A PPO is an acronym for “Preferred Provider Organization.” These are the most popular in the Family and Individual Market. With a PPO, you will need to obtain your medical care from physicians and hospitals on the list of providers the company provides in order to have your claims paid at the highest level. Services you render out of network may not be covered or could be paid at a lower level, leaving you responsible for more than just your co-payment.

HMO

HMO is an acronym for “Health Maintenance Organization.” An HMO will offer a wide range of services through network providers that have contracted exclusively with the HMO. As a member of an HMO, you will have to choose a primary care physician – known as your “PCP” – who will provide the bulk of your health care and refer you to HMO specialists if need be. If you seek healthcare outside of the HMO, they will not likely be covered, though there may be exceptions in the case of an emergency.

HSA

PPO plans with higher deductibles may be designed to work with the use of a “Health Savings Account” or HSA. An HSA is a special account that allows you to save money, pre-tax, to be used specifically for future medical expenses. Money in an HSA rolls over every year and can gain interest.

INDEMNITY

An indemnity plan allows you to visit the doctor or hospital of your choice, allowing you to direct your own healthcare. With this type of plan, the insurance company will pay a set portion of your total medical expenses. Paying for some services upfront may be required, for which you would then apply for reimbursement of some of the funds. These, by nature, tend to be more expensive than the other types of health insurance plans because you can select your medical care.