Medical insurance covers the medical costs related to an individual’s health care. The exposure to catastrophic risks that an individual faces concerns the hazards of accident and sickness. The probability of these hazards change over time with accident becoming less likely and sickness more likely as an individual ages.
Individuals have a choice between type of plans and features. Medical plan coverage varies by deductibles, co-pays and policy limits. Most comprehensive health insurance cover similar medical procedures contracted through a managed health care provider system. The types of insurance policies that are available can be categorized as follows:
- Indemnity Plans
- Health Maintenance Organizations (HMO)
- Preferred Provider Organizations (PPO)
- Point of Service Plans (POS)
Self-employed individuals and employee participants can utilize certain provisions in the tax code which allow tax deductibility of health insurance premiums and unreimbursed medical costs. As a result of these tax provisions, taxpayers can reduce the after-tax cost of their medical care through participation in the following:
- Health Savings Accounts (HSA)
- Cafeteria Plans (IRC Sec 125)
The Patient Protection and Affordable Care Act of 2010, better known as “Obamacare”, has been the most recent legislation designed to reform the delivery of healthcare to Americans. According to the legislation:
- No discrimination based on gender.
- Insurance companies cannot take away coverage from sick people.
- Insurance companies must justify any increase in the cost of coverage.
- All Americans will purchase or be provided with healthcare based on income and employment.
- Americans cannot be denied coverage based off of pre-existing conditions.
- No co-pays for domestic violence screening, birth control or other key medical expenses.
- There will be no annual or lifetime limits on the amount of care a patient needs.
- Small businesses may receive tax credits for providing their workers with insurance.
A financial advisor can help a client better understand recent legislation and how the changes affects them and if needed what decisions need to be made.
