Student
Health Insurance
Author:
Tony Novak
Students
often wonder if they really need health insurance. It seems like a reasonable
question when you are young and healthy and seemingly invincible. After all,
almost everyone who knows how to access the health care system is provided
with basic health care services and acute care (like emergency care) in the
United States, regardless of whether or not they have health insurance. Young
adults tend to use health care services less often than any other group.
The odds are that a young adult will go more than 12 months without any need
for health care. Even among those who need health care, the likelihood of
exceeding $1000 annual healthcare expenses is very small. So it is reasonable
to wonder whether a young adult really needs health insurance at all.
But
the situation changes when we consider the more extensive and more costly
types of health care. The ability of a patient to obtain top quality medical
care for the most serious types of health care - things like transplants,
extended hospital care, physical rehabilitation, and long term outpatient
care - depend more on whether the patient has adequate health insurance than
any other factor. A simple attack of appendicitis could easily wind up costing
more than $25,000. Even an affluent family will have difficulty arranging
adequate medical care without insurance coverage. Unfortunately, if you wait
until you need this type of care it will be difficult or impossible to buy
health insurance that covers these items. Often the most immediate insurance
concern for young people is the fact that most colleges, trade schools, internship
programs, sports teams, community-sponsored travel opportunities and many
other activities require health insurance as an admission requirement. Without
health insurance, you do not pass "go". So there is usually no
question about it - most young people with ambitions to advance their education
need to have some type of health insurance. Coverage Options There are many
types of health insurance plans available to young adults. The most popular
plans are listed below. Parent's Policy - Most students continue to be covered
under a parent's policy. If this option is available, it is almost always
the best option. But most health plans require that proof of full-time enrollment
be provided. Be aware of the maximum age for this benefit. In many cases
this coverage will expire when the student reaches age 23 (or at another
age as stated in the insurance policy).
Employer
Group Coverage - Most employers provide health insurance to their full
time employees and pay for most of the cost of this employee benefit. This
is called group health coverage. This benefit is completely under the control
of the employer. Many people do not realize that there is no
requirement for an employer to provide this benefit. Most group health plans
require that new employees wait a few months before becoming eligible for
coverage.
School-Sponsored
Coverage - These are usually uninsured managed care arrangements to provide
care to students in the local area of the college or university.
Student
Medical Policies - These are privately insured major medical policies
designed specifically for students. These are portable and offer coverage
to the student in any location in the U.S. These plans also cover graduate
students, and are available regardless of age or health. In most parts of
the U.S., students can buy a high quality health insurance plan for less
than $70 per month at ww.medsave.com.
Short
Term Medical Policies - Interim or gap insurance policies are available
to cover from one to 12 months. This coverage is inexpensive and easy to
obtain online in most states. The quality of the coverage is excellent except
that it does not cover pre-existing conditions. These provide coverage in
the U.S. only.
Individual
Medical Policies - Permanent policies that you buy directly from an insurance
company offer excellent coverage, strongest financial guarantees, and the
most stability. These often provide worldwide coverage. But all this comes
at a higher price and coverage is issued for a minimum of 12 months.
Travel
Coverage / International Policies - Students planning overseas travel
should purchase a separate medical insurance plan for the time that they
are traveling, since most student health plans do not cover charges incurred
outside of the U.S. These policies are specifically designed to pay for medical
expenses and deal with the other international complications (language, currency
and business issues) typically incurred while obtaining medical treatment
overseas.
Terms
to Know Deductible or Co-payment - this is the portion of the bill that
you pay before the insurance comes into play. These help reduce the cost
of the insurance. HMO - stands for "health maintenance organization".
The HMO may pay to keep you healthy, rather than only cover problems hen
things go wrong. HMOs tend to be popular among young healthy people, but
criticized by people receiving more serious medical care. Private physicians
tend to feel that they lose control over the quality of a pateint's care
when an HMO is involved. Indemnity plan - means that the policy reimburses
you for any ordinary and necessary medical expenses. This is the least restrictive
type of coverage but also the most expensive. Managed Care - this means that
the insurer has some authority to influence the type of health care you are
provided. This cuts healthcare costs but may also limit your treatment. Pre-existing
condition - a medical situation that started before your insurance policy
that may not be covered by the health insurance policy. Premium - the cost
of the policy, usually ranging from $25 to over $200 monthly. Tax-deductible
- reduces your taxable income and thereby reduces your total tax due at the
end of the year. Most health insurance is not tax deductible by individuals.
Tax-free - the benefit provided by health insurance is usually tax-free.
This means the value of the coverage received as well as any cash benefit
paid as the result of a claim. Underwritten - this means that not everyone
will be accepted because acceptance is based on individual medical history.
The insurance company reviews each application and selects the healthiest
applicants for enrollment. Premium rates are lower for those accepted, but
these plans offer no solution for people with pre-existing health conditions.
About
the author:
Tony Novak, MBA, MT is a writer and financial adviser
in Narberth, PA focusing on tax and employee benefit issues. His businesses
www.MedSave.com and Freedom Benefits Association provide online benefits
enrollment for thousands of individuals and businesses nationwide.
