Your Health Insurance, no matter what type you have, is unlike any other type of insurance. PPO, HMO, Medicare, private or group health, the likelihood of you having a claim, is very high. So, is it really even insurance?
There are three basic types of insurance. Property and Casualty, Indemnity, and Health and Life. each of these are known as Risk Assignment.
Property and Casualty Insurance covers you against a loss of physical property, plus the use of it, and any damage caused by that loss. This is your auto insurance, homeowner's coverage, etc. This is the simplest form of insurance. The risk of you losing or damaging that property is fairly low, so the premium is a small percentage of the total value plus the total risk. You can start and stop your coverage whenever you want, because there are no enrollment periods.
Indemnity Insurance covers you and other parties in the event of a loss due to your negligence or mistakes. For medical professionals, this would be malpractice insurance.
Again, the probability of a loss is very low, so premiums are reasonable. Then we have Health and Life. The major difference for this type of insurance is, we each have a very high probability of having a claim. For
Life Insurance, obviously, we will all die at some point. While there are many types of Life Insurance, your coverage is really for a premature, or unexpected death. Most insurers use health underwriting, a series of screening questions, to determine your risk. A simple medical exam may be required. Premiums may be adjusted higher, or the policy may be denied altogether depending on the results of this exam and the answers to the screening questions.
Health Insurance is much the same as Life Insurance. Sooner or later, we all experience some type of health issue. To avoid that risk, or at least reduce it, even the healthiest and fittest among us would be wise to have annual check ups, periodic screenings, lab analysis of blood and urine, etc. Health Insurers promote preventative medicine as a way to reduce your risk, and their's. Prostate exams are now common, and credited with cutting death from this type of cancer in half! (source: cancer.net)
The more preventive medicine catches disease early, the more it reduces costs, keeping premiums lower for everyone. But this is also why we have set enrollment periods for health insurance. These periods, any person could go without insurance until they experienced a serious diagnosis, then enroll in an expensive plan to cover all the costs of treatment.
Obviously, this would result in huge losses for the insurer. (this is called Adverse Selection) When we hear new clients say, "I don't know why I have to have health insurance, I'm healthy," the answer is simply, "…for now". Health Insurance is simply insurance against the risk of financial loss due to medical expenses. The probability of those losses are high so premiums are high.
Assess your health insurance plan every year. Be sure it continues to suit your needs, and you risk tolerance.
- Medicare Part A: Generally, when you first turn 65.
- Medicare Part B: When you first turn 65 or when your group health insurance ends if you are over 65. there is also a "general medicare enrollment period, January through March.
- Covered CA: this is subject to change each year, but we expect it to be October through December annually
- Medicare Part D: Drug plans are part of Annual Enrollment Period, October 15-December 7.
- Medicare Advantage Plans: Also part of Annual Enrollment Period, October 15-December 7.
- Medicare Supplements: When your Medicare Part B takes effect. Also, in California, changes can be made in the 60 days following your birthday each year.
For each of these plan types, there are also Special Enrollment Periods where you may qualify to update or change your coverage. These are usually associated with some type of loss of your existing health coverage through no fault of your own.