Rising health insurance costs have caused 2 out of 5 employers to no longer provide health insurance coverage to their employees. USA Today reports that the average cost for a family health insurance policy is over $10,000 a year. Because of this, many Americans have decided to forgo either individual or family health insurance and instead pay out of pocket in the event of a medical emergency. However, recent studies have shown that the uninsured are often forced to pay 2.5 times what most health insurers paid.
Those who do continue without health insurance are less likely to receive the proper care when it is needed. A study spanning over eight years found that the "uninsured receive less care and experience worse outcomes”. Children who have discontinued health coverage are also extremely at risk. A 2005 study shows that children without medical care for even part of a year commonly do not seek medical attention and do not get prescriptions filled.
The biggest difference between a private health insurance plan for an individual and one which covers a family is the structure of the deductible. The deductible is a set amount that a member must pay before the insurance company begins to pay for services. A person with an insurance policy that has a deductible will be required to pay for the medical services they receive until the amount they have spent towards services reaches the amount of the deductible. After the member has spent up to the deductible, the insurance coverage will kick in to cover subsequent services. The best family insurance is that which has separate deductibles for each individual and then a family deductible. For instance, a good plan might have a $5000 deductible for each family member and a $10,000 deductible for the whole family. Each individual must reach $5000 in services before the insurance begins to pay for their care, OR when the sum of expenses of all family members reaches $10,000 then the insurance will kick in to cover all members. Insurance carriers such as Aetna offer this type of plan.
However, other plans may be structured with a 2 member or 3 member maximum on the deductible. For instance, some UnitedHealth One plans have a 2 member maximum family deductible. This means that 2 family members must each pay for services up to the deductible before other family members can receive benefits. This deductible structure might present a problem however. A family with a $2000 deductible, 2 member maximum plan might see 4 family members each pay for $1500 in services. Though this would equal $6000 total spent by the family, since no 2 members would have yet each reached $2000, no family member yet be covered outside of the deductible. Celtic insurance company has some plans with a 3 member max, where 3 family members must each spend up to the deductible before all family members are fully covered. This set-up makes it very difficult for the family to reach their deductible. The bright side of these 2 or 3 member max situations is in the event that 4 family members reach $1500, as in our first example, and then eventually 2 family members reach the $2000 amount, the insurance company would write a check back to the family for money spent in excess of the deductible.
Another key factor to consider when buying family health insurance is whether the insurance company prices the product by individual family member or by a set family rate. For instance, in New Jersey many of the family plans by Horizon and Oxford Health Plans have family rates regardless of the number of dependents. In such a case, it may make sense for a family with a single child dependent to purchase multiple insurance policies rather than one which covers the whole family. Because a set family rate plan will cover many dependents, it may be unnecessarily costly for a family with only one child. It might be cheaper overall to buy a child-only policy for the child and another policy for the parents. As a side-note, it is important to remember that if one member of the family has some preexisting condition and is going to receive an increased rate, the buyer should make sure that the entire policy is not rated up but is rated up just for that family member.
The final thing to look for when buying a family insurance policy is a strong preventive care package for children with little or no co-pay. These benefits are typically not expensive but are very valuable for your child’s future health, and so are a great investment.