Family Health Insurance

Many times, a personal health insurance plan can easily be expanded to provide coverage for the entire family.  If your household is growing, and you want to purchase family health insurance, then you have several important things to consider before you buy a policy or add family members to an existing policy.

Family Health Insurance Basics

As is the case with many types of insurance, you're going to need to strike a balance between what you can afford to buy, and the depth of health care coverage you're looking for in an insurance policy.  The basic relationship between coverage and cost of insurance is pretty simple:  the more coverage you want, the higher the cost of the insurance.

Another driver of cost is the demographics of family members you might be adding to an existing health insurance policy.  A member's age, gender, and the use of tobacco are important variables in developing a quote for a new policy.

Types of Family Health Insurance Policies

There are really only two types of health insurance policies that you can buy for your family.  The first is called a fee-for-service or indemnity plan, the second is a managed care network, often called a health maintenance organization, or HMO.  There are many variations between these two ends of the spectrum, but if you understand these two types of policies, then understanding hybrids such as the point of service or POS plan is easier.

Fee for Service Plans

Fee-for-service plans, also known as indemnity plans, offer you the most flexibility.  Unfortunately, that additional flexibility comes at a cost.  A fee-for-service plan allows participants to freely choose their medical care providers.  Participants usually pay for services at the time they are rendered, and then submit paperwork to their insurance companies to obtain a reimbursement payment.

Indemnity plans may be the better choice if the following statements apply to your situation:

• I'm willing to pay more to have complete freedom in choosing doctors and hospitals.
• I travel a lot, or my children live away from home, and we may need to see doctors in other parts of the country.
• I don't mind filling out health insurance forms or keeping receipts and sending them in so I can be reimbursed for payment.
• I am willing to pay for the extra cost of routine and preventive care such as checkups and vaccinations.
• I don't want to have to see my primary care physician each time I need to see a specialist.  If I need to see a specialist, I might ask my doctor for a recommendation, but I want the freedom to decide whom to go to, and when.

Managed Care or HMOs

Managed care networks or HMOs are the second type of family health insurance you can purchase.  Although the premiums, and out-of-pocket costs, are usually lower with an HMO, you are giving up some flexibility.  With an HMO plan, participants are limited in their selection of medical providers, and usually pay a nominal fee, called a copayment, at the time health care service is rendered.

An HMO plan may be the better choice if the following statements apply to your situation:

• I'd like to try to hold down my insurance costs, even if it means limiting some of my choices.
• I don't travel a lot, and almost all the care for my family will occur near our home.
• I don't like filling out forms or keeping receipts.  I want most of my health care services covered without a lot of paperwork.
• It's important that my health plan includes routine and preventive care.
• I don't mind waiting for services to be scheduled, or waiting for an available appointment with my doctor.
• I don't mind if I have to work with my primary care doctor for a referral to a specialist.  If my doctor doesn't think I need to see a specialist, then that is fine with me.

Family Health Insurance Quotations

Once you understand the basics of health care coverage, the next step is to shop around for insurance quotations.  When comparing quotes from different companies, or even comparing quotes from the same company for different levels of insurance, you need to keep a couple of things in mind.

The best way to calculate your overall cost of insurance is by using some historical information.  If you know the number of doctor visits, and types of medical services you can expect to have in a "normal" year, then you can use that information when you're comparing policies.

When comparing costs, keep in mind that the premiums quoted are not the only out-of-pocket expense you will incur.  Generally, there are three other variables that you should consider when choosing a health insurance policy: deductibles, coinsurance payments, and insurance co-payments.

Insurance Deductibles

Insurance deductible is the term used to describe a patient's monetary responsibility for medical expenses.  A deductible usually applies to a fee-for-service health insurance policy, and is paid in-full by the policyholder.  Only after a deductible is fully satisfied does the insurance company start to share in the expenses of providing medical services.

Coinsurance Payments

Coinsurance is a second form of shared medical expenses between the policyholder and the insurance company.  Coinsurance usually occurs when the patient is enrolled in a managed care plan such as a health maintenance organization.  Coinsurance is a sharing of medical expenses when the patient goes outside the list of network providers associated with their medical plan - if the plan allows.

For example, if the coinsurance on a plan is 30%, then this means the patient is responsible for 30% of the medical costs when treatment is provided outside of the network.  Coinsurance is usually applied after a deductible is first satisfied.

Insurance Copayment

Insurance copayment is a small, or nominal, fee that is usually paid at the time medical services are provided under managed medical plans such as health maintenance organizations.  Typical copayment amounts are in the range of $10 to $25.

Free or Low Cost Health Insurance

If your family is expanding, and you're not sure if you can afford health care insurance for your new family members, then you might want to see if you qualify for low cost or free health insurance.  The U.S. Department of Health and Human Services is sponsoring a program known as Insure Kids Now!  Through this funding, every state has a health insurance program that covers infants, children, and teenagers.

Typical insurance coverage under the Insure Kids Now! Plan includes:

• Doctor Visits
• Prescription Medications
• Hospitalization Coverage

Children that do not currently have health insurance are likely to be eligible, even if you are employed.  Each state will have different eligibility rules.  In most states uninsured children 18 years old and younger whose families earn up to $44,100 a year (family of four in 2010) are eligible.  You can call 1-877-KIDS-NOW toll free for more information or visit the Insure Kids Now website to find out if you're eligible for this important program.

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