FAQs  -- Frequently Asked Questions

Answers to the following frequently asked questions below:

General Questions
What is a deductible?
What is coinsurance?
What is the difference between a "sick visit" and a "wellness visit"?
Why should I buy from richdayhealthplans.com?
What do you do with the information I provide you?
Why use a credit card for the first payment of premium?
What is an application fee?
Do you offer the best pricing?
What if I need to talk with a human?
What if I have made out an application and I change my mind?
Can I purchase Dental and/or Vision insurance?
I am self-employeed, can I deduct my premiums?
I am insured by my employer. Does it make sense to insure my spouse and kids on an individual policy?

HSA Plans
What is an HSA (Health Savings Account) type plan?
Do I have to deposit money into my HSA Account?
What if I incurred medical expenses but I didn't pay them with my HSA account money?
What is the HSA "Catch-up" provision?
How do I claim my HSA savings account tax deduction?
What if I don't spend all my HSA money?
Where can I open up an HSA savings account?
Show me an example of savings available using the HSA plan?

Short Term Medical
Long-term vs. Short-term medical coverage?
Who is eligible for Short-term medical insurance?
What are the typical Short-term medical insurance plan highlights?
Which Short-term medical plan is right for you?
What is excluded in a Short-term medical plan?
When does Short-term medical insurance begin?

What is a deductible?

The deductible is the amount you have to pay when you make a claim against your health insurance.  For example, if you need to go into the hospital and you have a $2000 deductible; you would be responsible for the first $2000.  Typically, each person on the policy, up to three, will have the $2,000 deductible – so, a total of $6,000 for the family.  Then, if you have a coinsurance, you would be responsible for additional money.    Back to Top

What is coinsurance? 

Most people we talk with aren’t even aware that they have a coinsurance factor that affects how much they must pay for hospital visits and other expenses that go toward the deductible.  Briefly, coinsurance is the amount you must pay after you have paid your deductible.  For example, your hospital stay is $28,000 for an appendectomy.  If you have a $2,000 deductible and an 80/20 coinsurance on the first $10,000, then you would be out-of-pocket $4,000. 

Here is how it works.  Of course, you understand that the $2,000 is your deductible, so you will pay that.  Then, there is your responsibility for 20% of the first $10,000 which equals $2,000 of the $28,000 total.  Therefore, your out of pocket expense is the total of your deductible and your coinsurance…$4,000.  That is your total risk!  The insurance company will pick up the balance owned to the hospital and doctors, or $24,000 in this example.
Most insurance policies have the 80/20 coinsurance on the first $10,000.  However, look carefully.  It may be 100/0, (Yes, 100/0 is that the insurance company pays 100% after you have met your deductible.) 70/30 or 60/40 or 50/50.  Also, make sure that it is based on the first $10,000.  It could be based on the first $20,000 – or even some other amount. .  Coinsurance can be confusing.  That is why many agents don’t even mention it to you.  WE DO mention it.  It is our responsibility to explain to you your total risk, so that you can make an intelligent, informed decision.   Back to Top

What is an HSA (Health Savings Account) type plan?

A special type of ealth insurance plan, (called Qualified High Deductible Health Plans) is designed to work in conjunction with a Health Savings Account, are less expensive. ( A Health Savings Account is an account that you open at your local bank.)  High Deductible Health Plans are typically configured to pay 100% of your covered expenses after you have met your deductible amount.  There are no copays for doctors, or drugs, but most people find that this is the least expensive way to insure yourself and your family. 

With an HSA plan, you not only save money on your insurance premium, in 2008, you can put up to $2,900 for an individual, and $5,800 for a family into a savings account – a Health Savings Account.  By merely putting this money into a special savings account, you get a tax deduction when you do your taxes.  It is very similar to making an I R A contribution.  That amount of money you put into the I R A or an HSA account is not taxable.   Assuming that you are in the 28% Federal tax bracket, and then add another 7% for the state taxes, you will save 35% on the money you put into an HSA account.  That means the government is paying about 1 out of every 3 dollars of your contribution for you.

An important distinction needs to be made concerning how deductibles are computed for Qualified High-Deductible Health Plans.  The family deductible is an aggregate or combined deductible.  Each person’s covered medical expenses go toward meeting the family deductible.  In 2008, the maximum family deductible is $5,650.  Each person’s covered medical expenses go toward meeting this amount.  Compare this to a traditional copay plan where three of the insured persons EACH have their own deductible that must be met.  It is much more difficult to have each person meet their deductible than it is to meet an aggregate deductible.

In addition, the money that is in the HSA account can accumulate.  Any money that is not spent on qualified medical expenses each year can be invested to earn interest, or even be put into the stock market.  Any contributions or earnings money that is left in your HSA account is not taxable if you use it for a qualified medical expense. (If you take the money out before the age of 65 to spend on non-medical expenses, you will pay the taxes on the money and a 10% penalty.)  You have never paid any taxes on the money you contributed to the H S A, and no taxes on any investment gains or interest gains.  Therefore,when you do take the money out,  after the age of 65, it will finally be taxed. 

Here are two factors to consider:  First, you probably have a lower tax rate at 65 years old than you have now.  Secondly, money that can appreciate without the burden of income taxes grows at a much greater rate.  After the age of 65, you can withdraw the money to buy a sailboat if you’d like…no longer is there a restriction that you must spend this money for qualified medical expenses.      

You can use the HSA money for a wide variety of medical expenses including eye exams and glasses, doctors, dentists, braces, drugs, fertility enhancement, chiropractor, acupuncture, psychiatrist, psychologist, surgery, and long-term care insurance.  (Long-term Care insurance is the only insurance you can purchase with your HSA money. You cannot use your HSA savings money to pay your health insurance premiums.)

List of Qualified Medical Expenses.

Health Savings Account type plans simply avoid the administrative surcharges associated with “copays” by choosing to purchase coverage for large, catastrophic claims and using the substantial premium savings to “self-insure” for the smaller routine claims. Back to Top

Do I have to deposit money in my HSA account?

No, you don't have to put money into your HSA account unless you want to. In fact, you don't even have to open up an HSA account. It is advisable that you open one, but no one is going to knock on your door and say, "Did you make your HSA contribution for 2008?" It is totally up to you. If you do open an HSA account, usually there is a $50 minum account size. Back to Top

What if I incurred medical expenses but I didn't pay them with my HSA account money?

If you pay for your drugs or doctor visit and you didn't have your HSA checkbook with you, or your HSA debit card in your purse, pay with your "normal" money. Then, after the fact, write yourself a check to reimburse yourself for the qualified medical expense.

Another typical event is the following: You haven't even set up your HSA savings account, but you need to spend money for medical expenses. Just keep your receipts. When you open up your savings account, you can write yourself a check for those expenses. In fact, you have until April 15th of the following year to open up an HSA Savings account and still have it affect your deductions for the current year. Not bad, eh? Back to Top

What is the HSA "catch-up" provision?

The "catch up" provision is part of federal regulations regarding HSA's and is aimed at policy holders 55 years and older. Those eligible may make additional annual contributions (in addition to the maximum allowed under their plan) of $900 for 2008 and increasing by $100 each year to a maximum additional calendar year contribution of $1000 in 2009. This provides policy holders 55 years and older, greater deductions on their taxes. Back to Top

How do I claim my HSA savings account tax deductions?

When you do your 1040 income tax form, there will be a question similar to, "What was your HSA contribution for 2008?" This amount that you contributed will come off "above the line".  That means it will not be taxed! Back to Top

What if I don't spend my HSA money?

It doesn't matter if you spend any of this money for medical expenses. Unlike a "flexible spending account" offered by many employers, this HSAmoney is not going to vanish. Some of you know that with a flexible spending account, you can pay for your medical expenses with pre-tax dollars. The problem is estimating what your medical expenses are going to be for the year. If you over-estimate, the money that is not used by you will be lost to the employer. 

The fact that you contributed the money to your HSA account is all that counts. If you didn't spend it, it will be there. You can contribute a like amount next year and watch it add up. If you didn't spend any of this HSA contribution money, and you added $5,800 each year for 10 years, you would have $58,000 plus interest, plus any investment gains. Back to Top

Where can I open an HSA savings account?

Many banks now offer HSA savings accounts. If you like to do your banking on the internet, HSABank.com is an excellent bank. They are knowledgeable, friendly and available by phone.

Blue Cross and Blue Shield of North Carolina® includes an HSA savings account in with their Blue Options HSA (sm). . Policy holders will have the Mellon HSA Solution and the advantage is lower fees and greater convenience.. Back to Top

Show me an example of savings available using the HSA plan?

This example is based on the average health insurance premium of an individual with a family of four living in a metropolitan area, covered medical expenses totaling $1,500, and $550 in expenses for dental care, contacts and eyeglasses.  Health insurance premiums vary substantially based on age, geographic location and other variables.  Federal tax savings calculations assume that contributions are deducted from federal taxes.  Withdrawals for nonqualified expenses prior to the age of Medicare eligibility are subject to a 10% penalty by the IRS  Back to Top

How can I make health insurance affordable?

A major consideration for most folks is affordability. Health insurance often represents a substantial portion of their budget.  By selecting a plan design that emphasizes catastrophic protection over (SM)aller “copay” expenses, a significant savings in premium is the result.  The savings can partially fund an HSA savings account, or be used to provide other benefits.  One thing is for certain; once you give premium dollars to any health insurance company, they are GONE.  Maybe you will have the claims that are paid, maybe you won’t, but, by “self-insuring” for the smaller claims, the premium savings are yours to keep in the years without claims.

In the occasional year when significant claims occur, the qualified high-deductible health plan in conjunction with an HSA savings account is still the most desirable, as the maximum “out-of-pocket” is limited to the plan Deductible and Coinsurance, if any.  The “copay plan would have a deductible, plus coinsurance, PLUS an unlimited number of copays that may drive the out-of-pocket costs higher and higher for every drug filled, every doctor visit, and any and all outpatient tests, and so on with no cap. Back to Top

Long-term vs. Short-term coverage?

Short-Term Medical insurance is an insurance plan you can purchase to cover you and or your family for 30 to 185 days.  You can purchase $2 million of coverage for as little as $33 per month. 

Short-term medical may be right for you and your family if you are:

• Between jobs or laid off and you don’t have health insurance.

• Looking for a lower-cost alternative to COBRA.

• A recent college graduate.

• Waiting for employer-sponsored coverage.

• Temporary or seasonal employee.

Short-term medical insurance is:

• Simple to obtain.  You get coverage for unexpected illnesses and accidents; pre-existing medical conditions and routine doctor visits aren’t covered, however.

• Fast and can be obtained as early as the next day!  All you need to do is answer a few medical questions.

• Affordable.  You design the plan that best suits your needs and your budget. Back to Top

 Who is eligible for Short-Term Medical insurance?

• Healthy individuals between the ages of 30 days and 64 years, 11 months, who have a temporary need.

• Dependant children through the age 18 (age 24 if full-time student) may be covered as dependents on their parent’s plan.

• Foreign residents living in the U.S. for at least one year at the time of enrollment, with proof of Alien Registration Receipt Card, visa or other appropriate documentation.

Note:  Short-Term Medical insurance is often a lower cost alternative to COBRA.  To preserve your rights to guaranteed health insurance and coverage for pre-existing conditions, you may need to purchase up to 18 months of COBRA.  You may forego these rights when you purchase a Short-Term Medical plan or choose to go without insurance.  If you have pre-existing conditions that would make it impossible or very difficult to obtain Long-Term Major Medical insurance, don’t purchase Short-Term medical.  Back to Top

What are the typical Short-Term Medical insurance plan highlights?

• Freedom to choose your own doctors and hospitals

• Prescription drug coverage

• In-hospital and out-patient benefits

• Coverage continues beyond the policy period for up to 12 months if you are hospitalized – at no additional cost. Back to Top

Which Short-Term Medical Plan is right for you?

• Length of coverage options: Choose anywhere from 30 – 185 days with Assurant Health’s plan.

• Deductible options: $250, $500, $1,000, or $2,500.  If the $250 or $500 deductible option is selected, a covered person needs to satisfy a deductible before the benefits are paid.  Families of 3 or more people will only need to satisfy a maximum of three deductibles.

• One Family Deductible – only one deductible needs to be satisfied by all covered family members if the $1,000 or $2,500 deductible option is selected.

• Rate of payment options (coinsurance): 100%, 80%/20% or 50%/50%.  The $100% option is not available with the $250 deductible

• Lifetime maximum benefit:  $2 million. Back to Top

What is excluded in a Short-Term Medical plan?
A Short-Term Medical plan does not cover:  pre-existing conditions (including those not inquired about on the application); dental or optical treatments; routine physical exams; normal pregnancy or childbirth; well child care; interscholastic and intercollegiate sports injuries; expenses incurred outside the United States, its possessions, territories or Canada.  Other exclusions are listed in detail in the policy you will receive when you purchase Short-Term Medical. Back to Top

When does Short-Term Medical insurance begin?

Your coverage will begin at 12:01 A.M. the day of your approved effective date, provided the application received is complete, meets the requirements for acceptance and the full initial premium is received.  The approved effective date is determined by the later of:

• Requested effective date on the application;

• Day after the postmark date affixed by the U.S. Post Office or day after the metered date on the envelope;

• Day after the application is received by Assurant Health, if legible U.S. Post Office postmark or metered date is not available. Back to Top

What is the difference between a "sick visit" and a "wellness visit"?

A Sick Visit is a visit you make to a health care provider when you are sick. You may have a cold, a pain or some condition that causes you to seek help. However, a Wellness Visit is a visit you usually make just to get checked up. Many people get an annual check up to make sure that they don't have any undiscovered adverse health conditions. Back to Top

What is the difference between what the "doctor says" and what the "doctor does"?

Most policies make a distinction between what the doctor says, his consultation, and what he does. The insurance covers the doctor's consultation, but if he performs a test, that usually isn't covered under the copay. For example, let's say you have a bad sore throat. You go to the doctor. He thinks you may have strep throat. He will perform a test to determine if you have strep throat. The cost of the doctor's visit is covered under the copay, but the cost of the lab test is not covered under the copay. The lab test cost would go toward your deductible, but if you are not close to meeting your deductible, you will end up paying out-of-pocket for the lab test. This surprises many people...they don't understand that copays don't cover everything. Back to Top

Why should I buy from richdayhealthplans.com?

We have years of experience helping people to get the best-fitting and least expensive insurance policies. We don't work for any of the companies we represent. We work for you, the client. Therefore, we can make unbiased recommendations to fit your particular needs.

By going through the quoting process, we can explain the coverage particulars, compare the coverage of one company to another, help you determine the amount of risk you want to take on, answer your many questions, and finally, help you to decide on the best plan for you. Back to Top

What do you do with the information I provide to you?

We will use your information in the most careful and secure way. We use the information to help us to get quotations from various companies. We don't share this information with anybody, any companies, other than the insurance companies in the process of getting quotes. We will never sell your name or any information gained from you to any list company. Any information that is not needed, or any quotes that are not accepted, if on paper are shredded, if on computer, they are "wiped" clean. Back to Top

Why use a credit card for the first payment of premium?

After you have gone through the quoting process and have made a selection, it will be necessary to provide the insurance company with the first premium payment along with the application for insurance. For convenience reasons, it is better to use a credit card. Usually, the credit card is not "dinged" until after you have "accepted" the coverage. If a check is provided, on the other hand, they will cash the check immediately. If you don't accept their offer, or decide against that accepting that company's coverage for some reason, you will have to wait for a refund check. This takes more time and is more bother.

After the first payment, most companies prefer to debit your checking account on a monthly basis. This is better for all involved. You don't have to remember to write a check. (You don't want your insurance to lapse because you were on vacation or were too busy.) It is less expensive for the insurance company to debit an account rather than handling a paper check. By the way, Blue Cross and Blue Shield of North Carolina® will send you a monthly bill for your insurance.

You don't have to worry about an insurance company stopping the automatic debit if you cancel your insurance. The insurance companies are regulated by the Department of Insurance. As long as you follow the procedures necessary to stop an automatic debit, you won't have trouble. Simply, the procedure is to provide the insurance company a letter requesting cancellation of the policy on a particular date, the policy number, the names of the people covered on the policy and your signature. Back to Top

What is an application fee?

Most companies charge an application fee. This fee is charged to cover their costs of setting up the account, requesting doctor's records, and providing you with a "no cost physical". Application fees are not refundable. Companies usually charge $20 to $50 for an application.  Please note that Blue Cross and Blue Shield of North Carolina® does NOT charge an application fee! Back to Top

Do you offer the best pricing?

Yes, we have found that most people purchase or change their health insurance only once every several years. Consequently, they don't become experts at making the most informed decisions. Without the internet, typically, the purchaser would have to visit or be visited by several insurance agents. Each time, they would see another company's offering, but there isn't a good way to compare plans. It is remarkable that most people don't take the time to properly shop for health insurance. Now, you can do it right on this website. Educate yourself, make a couple of tentative choices, go through the quoting process, and finally ask questions. You will find that you will make a better, more informed decision. Because sales of insurance come under the jurisdiciton of the Department of Insurance, no insurance agent can "discount" or give preferential pricing. Back to Top

What if I need to talk with a human?

Yes, we are humans. We specialize in helping people with their decision making. We realize that you don't buy insurance frequently, and you will not be expert at it. That's OK. We will help you to compare companys, coverage, risk levels, copays, coinsurance, and many of the other important topics. You can contact us by phone, email or smoke signals. (Just kidding about the smoke signals.) Back to Top

What if I have made out an application and I change my mind?

You are not obligated to accept coverage just because you have made out an application for insurance. Even after you have received your policy in the mail, you have 10 days free look. If there was an application fee charged, you won't receive that money back, but you will get your premiums back that you paid in advance. Back to Top

Can I purchase Dental or Vision insurance?

Yes, many companies offer dental and/or vision insurance with their main plans. If the company you like best doesn't offer dental or vision insurance, that's OK. You can purchase these policies separately. Back to Top

I am self-employed, can I deduct my premiums?

A self-employed individual is able to deduct his health insurance premiums from his income and the contributions to the HSA savings account. There are some qualifications, however: First, you must not be eligible to participate in an employer's subsidized health plan for you or your spouse. Secondly, the deduction cannot exceed the amount of net income of your business. Any deductions that you take are "above the line" meaning that you can take the duction even if you don't itimize. Back to Top

I am insured by my employer. Does it make sense to insure my spouse & kids on an individual policy?

If your employer provides group medical insurance to his employees, he must pay, at least, fifty percent of the employee's insurance cost. However, the employer does not have to pay any money toward the spouse and the children. Almost always, you will find that if you insure your spouse and your children on an individual policy, you will save a considerable sum with one exception. Because individual medical insurance is individually underwritten, you will save only if you are healthy and can qualify for individual medical insurance without exclusions or rateups. Back to Top