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What about government health programs?

Government-sponsored programs for specific groups—such as Medicaid and the State Children's Health Insurance Program (SCHIP) for low-income individuals and families—and plans for seniors with Medicare are also available.

Medicaid provides health care coverage for certain people with limited income who are eligible to participate in the program. Medicaid is a Federal-State program that is operated by the States. Each State sets its own rules about eligibility and covered services.

Many groups of people are eligible for Medicaid coverage. Some of the factors affecting eligibility include age; whether you are pregnant, blind, or disabled; your income and resources; and whether you are a U.S. citizen or legal immigrant. Your child may be eligible for coverage even if you are not. Eligibility for children is based on the child's status, not the parent's status.

If your income is limited and you can't afford the care you need, you should apply for Medicaid whether or not you think you qualify. A qualified caseworker in your State will evaluate your situation to see if you are eligible for Medicaid.  

Congress created the State Children's Health Insurance Program (SCHIP) in 1997. SCHIP is a Federal/State partnership similar to Medicaid. SCHIP expanded health insurance to children whose families earn too much money to be eligible for Medicaid but not enough to purchase private insurance.

Like Medicaid, SCHIP eligibility and covered services vary from State to State. In some States, Medicaid and SCHIP are combined. In other States, they operate as separate programs. Although health benefits covered by SCHIP vary, all States must provide coverage for well-baby and well-child care, immunizations, and emergency services.  You can get more information about SCHIP online at http://www.insurekidsnow.gov. This site provides a link where you can access specific information about SCHIP in your State. Or, to get information by phone, call 1-877-KidsNow (1-877-543-7669) toll-free.

A high-risk pool is a State-operated program that offers health insurance to individuals who don't have access to coverage through an employer or other group and have a serious medical condition that prevents them from purchasing private health insurance. It is similar to risk pools for automobile insurance to ensure coverage for people who can't get it elsewhere. In most States, the risk pool is funded through premiums, supplemented by tax revenues or by an annual assessment on health insurance companies operating in the State.

More than 30 States have established high-risk pools that provide access to comprehensive health coverage for more than 180,000 people across the country. An estimated 1 million people who are eligible for coverage in high-risk pools don't participate. In a few cases, States don't have adequate funding for the pools and are unable to enroll all eligible individuals.  To find out if coverage through a high-risk pool is an option in your State, contact your State Insurance Commissioner. Check the blue pages of your local phone book for contact information.

Medicare is the Federal health insurance program for Americans age 65 and older, some disabled Americans, and individuals who have end-stage renal disease (ESRD). The Original Medicare Plan, which is available nationwide, is a fee-for-service plan that is managed by the Federal Government. It pays for many health care services and supplies, but it won't pay all of your health care costs.

Generally, you should enroll in Medicare when you first become eligible. If you choose to enroll at a later time, you will pay a late-enrollment penalty.

If you already have health insurance from an employer or another source, talk to your benefits administrator about whether you should join Medicare or not while still covered.

Medicare has four parts: hospital insurance, known as Part A; medical insurance, known as Part B, which provides payments for doctors and related services; and prescription drug coverage, known as Part D. Medicare Part C gives you the choice of receiving the benefits of Medicare A, B, and D through a private health plan, like an HMO or PPO. This coverage is called Medicare Advantage and is described on page 16 of this booklet. 

Most people don't pay a premium for Part A, since they already paid for it through payroll taxes while they were working. There is a monthly premium for Medicare Part B ($93.50 per month in 2007, but people with incomes over $80,000 pay more).

Usually, you will pay a premium if you decide to enroll in Medicare's prescription drug plan. If you don't enroll as soon as you are eligible, your premium will be higher if you decide to enroll at a later time. Also, once you are past your first eligibility, you will have to wait for the annual enrollment period (generally November 15-December 31 of each year) in order to enroll in Medicare's prescription drug coverage.

In January 2006, prescription drug coverage (Part D) became available to Medicare beneficiaries for the first time. Through this new benefit, Medicare now pays for a portion of your prescription drug costs. Both brand-name and generic prescription drugs are covered at participating pharmacies across the country. Everyone with Medicare is eligible to enroll in this coverage, regardless of income and resources, health status, or current prescription expenses.

If you choose to have this coverage, you will be able to get your drugs in one of two ways. You can buy an individual drug plan, or you can sign up with a Medicare Advantage plan, like an HMO or PPO. Either way, you will pay a monthly premium, which varies by plan, coinsurance or copays for your drugs, and in some cases, a yearly deductible (no more than $265 in 2007).

There are many plans participating in the Medicare prescription drug program. This broad competition among plans should have a positive effect on consumers' out-of-pocket costs. Nevertheless, deductibles, out-of-pocket costs, and covered drugs vary widely across the plans. Some plans may offer more coverage and additional drugs for a higher monthly premium.

If you have limited income and resources and you qualify for extra help, you may not have to pay a premium or deductible. If you are eligible, you will get help paying for your drug plan's monthly premium, yearly deductible, and prescription copayments. The amount of help you get will depend on your income and resources.

To find out if you qualify for extra help, contact Social Security at 1-800-772-1213 or online at http://www.socialsecurity.gov. Or, you may contact your State medical assistance office. Call Medicare at 1-800-Medicare or go to http://www.medicare.gov to get a phone number for the medical assistance office in your State.

If you already have prescription drug coverage from an employer, former employer, or other source, you may be better off keeping that coverage. You should contact your benefits administrator to find out how your existing coverage works with Medicare drug coverage before you make a decision. You may decide to keep the drug coverage your have, or you may want to join a Medicare drug plan instead of, or in addition to, your current plan.

If you think you might be better off changing out of your employer-based drug plan, be sure to consult with your employer first. If you leave your employer coverage and later change your mind, you probably will not be able to return to it for health or prescription drug coverage.

Your employer, union, or other group is your best source of information about your current drug coverage. If you need more help in deciding what to do, you can call your State Health Insurance Assistance program to get personalized counseling about your choices. To get their telephone number, visit http://www.medicare.gov online and select "Helpful Telephone Numbers and Web Sites."

Another type of Medicare coverage, known as Medicare Advantage Plans, is available in many areas of the country. These Medicare plans include HMOs, PPO's, private fee-for-services plans, and special needs plans.

In comparison to the Original Medicare Plan, Medicare Advantage Plans often give you more choices and sometimes extra benefits, like coverage for more days in the hospital. Many include Part D drug coverage. To join a Medicare Advantage Plan, you must have Medicare Part A and Part B coverage. You will pay the monthly premium for Medicare Part B, and you may also have to pay a premium to your Medicare Advantage Plan for the extra benefits it offers.

Since Medicare doesn't cover all medical expenses, people who don't have other health insurance and choose not to enroll in a Medicare Advantage plan may decide to purchase a Medigap policy. Medigap is private insurance that helps to cover some of the gaps in Medicare benefits.

Since 1992, there have been 10 standard Medicare supplemental policies. These Medigap policies are designated by the letters A through J. In 2005, two new Medigap policies—designated by the letters K and L—were added. Medigap policies K and L have higher out-of-pocket amounts and lower premiums than policies A through J. Although all 12 standard policies may not be available to you where you live, supplemental Plan A is available to Medicare beneficiaries everywhere.

What are the different types of health insurance?

Most people get health insurance through their employers or organizations to which they belong. This is called group insurance. Some people do not have access to group insurance. They may choose to purchase their own individual health insurance directly from an insurance company. Many Americans get health insurance through government programs that operate at the national, State, and local levels. Examples include Medicare, Medicaid, and programs run by the Department of Veterans Affairs and Department of Defense.

If you are self-employed or your employer does not offer health insurance, you may not have access to group insurance. You may, however, be able to purchase individual coverage directly from an insurance company. When you buy your own health insurance, you will be responsible for paying the entire premium rather than sharing the cost with an employer. You should shop around to find a plan that fits your needs at a price that you are willing to pay.

Most self-employed workers are able to deduct their health insurance premiums from their Federal taxable income, providing them with an important tax saving. Most States also offer similar tax preferences. If you are self-employed and buy individual health insurance, you should consult a tax advisor to find out if you are eligible for this deduction.

Insurance plans differ greatly from one company to another and, within an insurance company, from one plan or product to another. Some plans have multiple products (options) from which you can choose; read carefully through the "fine print" to be sure you understand the various choices.

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Indemnity Insurance

If you have indemnity insurance, your plan only pays part of your medical bills. You are responsible for the rest. Your out-of-pocket costs are likely to be higher for certain services than with some managed care plans. Usually, you will need to spend a certain amount each year before your plan begins to pay benefits. This amount is called a deductible.

Deductibles are the amount of the covered expenses you must pay each year before your plan starts to reimburse you. Deductibles might range from $100 to $300 per year per covered person or $500 or more per year for a family.

Indemnity insurance pays a portion of the bill—usually 80 percent— after the deductible has been met, although this may vary. You pay the remainder, usually 20 percent of the total bill. This is called coinsurance.

Managed care plans

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More than half of all Americans who have health insurance are enrolled in a managed care plan. Managed care plans usually cover a wide range of health services. With these plans, costs are lower when patients use the doctors and other providers who participate in the plan (network providers).

In most cases, you will not have to fill out any insurance forms or submit any claims to the insurance company when you use in-network providers. Usually, you will pay a copay (typically $10 to $20 for an office visit) each time you go to the doctor or hospital or fill a prescription. Your copay may vary depending on whether you see your primary care doctor or a specialist and whether you receive a generic or brand name prescription drug.

Most managed care plans have a list of drugs that they cover, called a formulary. Your copay for prescription drugs will probably depend on whether you are getting a generic drug, a brand name formulary drug, or a brand name drug not on the plan's formulary. For example, the copay might be $10 for a generic drug, $25 for a formulary drug, and $40 for a brand name non-formulary drug. Be sure to check the formulary of the plan you are considering to make sure it will cover any routine prescription drugs that you and your family members take.

If you choose to enroll in a managed care plan instead of an indemnity plan, you may have lower out-of-pocket expenses for health care, as long as you see doctors who are part of the plan (in-network providers).

There are three main types of managed care plans:

• Health maintenance organizations (HMOs).
• Preferred provider organizations (PPOs).
• Point-of-service plans (POS).

All three types of managed care plans have contracts with doctors, hospitals, and other providers. They have agreed on certain fees with these providers. As long as you get your care from a plan provider, you typically will be responsible only for any cost-sharing your plan requires.

Health Maintenance Organizations

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Many of these plans focus on preventing diseases and staying healthy. If you join an HMO, you typically must receive all your care from network providers, except in medical emergencies. When you join, you pick a primary care doctor to manage your care. HMOs usually have copayments rather than deductibles or co-insurance.

HMOs have long been known for a focus on prevention and wellness. Traditionally, HMOs required that you receive most of your care from one primary care physician who is aware of your total health picture. If you belong to an HMO, usually you must receive all of your medical care from network providers, except in emergencies. HMOs usually have flat copayments rather than deductibles and co-insurance and no lifetime limits on coverage.

After you enroll in an HMO, you typically will need to select a primary care physician who will be responsible for coordinating all of your care. Primary care physicians may be family practice doctors, internists, pediatricians, obstetricians-gynecologists, or general practitioners.

If you become ill, your primary care doctor will see you first, unless it is an emergency. Your primary care doctor will give you a referral if he or she thinks you need to see a specialist. Usually, your HMO will not provide coverage for a specialist unless you have this referral.

In most cases, you must see a specialist who participates in your HMO. Sometimes, in special circumstances, HMO patients may be referred to providers outside the HMO network and still receive coverage.

If you need to be admitted to the hospital and it is not an emergency, you may have to obtain precertification from your plan. In most cases, your physician or hospital will take care of this for you. Non-emergency hospital care may not be covered without precertification. In case of an emergency admission, you or a family member, your doctor, or your hospital will need to contact your plan within a certain timeframe (usually within 48 hours of admission) to obtain written confirmation of coverage for the hospital stay.

Today, some HMOs do not follow this "primary care model." So, if you are considering a traditional HMO, it is important to compare the features and requirements among the various HMO plans that are available to you.

Preferred Provider Organizations and Point-of-Service Plans

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Preferred provider organizations (PPOs) contract with doctors, hospitals, and other providers but typically do not manage your care. PPOs allow you to see providers outside the network, but you will pay more for your care if you do. These are the most common work-based health plans.

Point-of-service organizations (POS) plans are a combination of a PPO and an HMO. POS plans have a primary care doctor who manages your care but allow you to seek care from doctors and hospitals that are not part of the plan. You pay more for seeking care out of network, however.

PPOs and POS plans combine features from both fee-for-service and HMOs. PPOs and POS plans offer more flexibility than HMOs in choosing physicians and other providers. POS plans have primary care physicians who coordinate patient care, but in most cases, PPOs do not. Premiums tend to be somewhat higher in PPOs and POS plans than in traditional HMOs.

Generally, the greater the emphasis on in-network care, the lower the premiums and the more comprehensive the benefits will be. Consumers and employers make tradeoffs, deciding which is more important: a greater choice of providers or a lower premium.

If you are enrolled in a PPO or POS plan, your out-of-pocket expenses will be less if you use a provider who is part of the plan (a network provider). However, you will still get some reimbursement if you receive a covered service from a provider who is not in the network. In this case, your reimbursement will be at a lower level than if you used an in-network provider.

If you choose to go out of network for your care, you may have to meet a deductible before your plan begins to pay benefits. Also, you may have to pay the bill yourself and submit paperwork to the plan for reimbursement of covered expenses.

If you are in a PPO, you will not need a referral to see a specialist or get other types of care, but you may need to take some paperwork with you. Be sure to ask your doctor if you will need a written order or other documentation when you are referred to a specialist, laboratory, or other provider.

When you go out of the plan's network for care, PPOs and POS plans work like fee-for-service plans and charge you coinsurance. For PPOs, this coinsurance may be different than the coinsurance charged for in-network providers. Also, you may have to pay the total cost of care right away and then file a claim with your insurance company to get the allowable reimbursement for out-of-plan care.

Consumer-directed health saving account plans

These newer health plans give  you more control over your own health care, both in choosing the care you receive and paying for it. They often require you to pay a substantial deductible (often $2,000 or more) before coverage starts, and are combined with a personal health savings account or another similar product that allows you to pay for care with pre-tax money.    Find an HSA plan that's right for you.

Consumer-directed health plans allow individuals and families to have greater control over their health care, including when and how they access care, what types of care they receive, and how much they spend on health care services.

A health savings account is a type of medical savings account that allows you to save money to pay for current and future medical expenses on a tax-free basis. In order to be eligible for a health savings account, you must be covered by a high-deductible plan, not have any other health insurance (including Medicare), and not be claimed as a dependent on someone else's tax return.

Archer Medical Savings Accounts are individual accounts that may be set up by self-employed individuals and those who work for small businesses (less than 50 employees). To set up an Archer medical savings account, you must be covered by a high-deductible health plan. Either the employee or the employer may contribute to an Archer account, but both cannot contribute to the account in the same year. Individuals control the use of funds in Archer medical savings accounts and can withdraw funds for qualified medical expenses. You can roll over funds from year to year, and balances in Archer medical savings accounts are portable. This means you can take them with you when you change jobs or retire.

You can use this account to pay for your qualified health expenses, including expenses that the plan ordinarily doesn't cover, such as eyeglasses and hearing aids. Expenses paid out of the HSA that are eligible expenses under your high-deductible health plan will count toward the plan's deductible.

During the year, you can make voluntary contributions to your health savings account using before-tax dollars. In some cases, employers may set up and help fund health savings accounts for their employees. A health savings account earns interest. If you have a balance in your health savings account at the end of the year, it will "roll over," allowing you to build up a cushion against future health expenses. A health savings account allows you to accumulate funds and retain them when you change plans or retire.

High-deductible health plans that can be used with health savings accounts are now being offered by many insurers. As of 2007, individuals contributing to a health savings account must be covered by a health plan with an annual deductible of not less than $1,100 for self-only coverage and $2,200 for family coverage. The deductible generally applies to all expenses, including prescriptions and doctor office visits, but in some cases, preventive care does not count toward meeting the deductible. However, most plans will cover preventive services, such as routine office visits, before you have met your deductible.

Under a high-deductible plan, out-of-pocket expenses in 2007 cannot exceed $5,500 for self-only coverage and $11,000 for family coverage. These dollar amounts are adjusted annually to account for inflation, and they include deductibles, copays, and other amounts, but not premiums.

After the deductible has been met, some plans will have a coinsurance of 10 to 15 percent of expenses but only up to the out-of-pocket limit in the plan. After you meet the out-of-pocket limit, the plan will pay 100 percent of expenses. Other plans will pay 100 percent after the deductible has been met.

Some insurers have negotiated discounted prices with participating physicians and hospitals, resulting in substantial savings to consumers who purchase high-deductible health plans. If you are considering this type of coverage, be sure to inquire about discounted prices.

Long-term Care Insurance

The purpose of long-term care is to provide the help you need to perform activities of daily living—such as bathing and dressing yourself. Or, you may need supervision because of dementia or another form of cognitive impairment. In addition to this custodial care, some people also need skilled nursing services due to serious illness.

You can receive long-term care in a nursing home, assisted living facility, or in your own home. The need for long-term care can arise at any time, regardless of your age. Older people use the most long-term care, but younger and middle-aged people sometimes need long-term care as well. You may need long-term care because of a chronic illness or disability that leaves you unable to care for yourself for an extended period of time.

Long-term care can be very expensive. On average, a year in a semi-private room in a nursing home costs about $58,000 (estimated annual cost in 2005). In some parts of the country, it may cost much more.

Home care is less expensive than nursing home care, but it is still costly. Home care can include part-time skilled nursing care, speech therapy, physical or occupational therapy, home health aides, and homemakers. Having the services of an aide in your home just three times a week-to help with dressing, bathing, preparing meals, and similar household chores-can easily cost $1,000 or more a month. If you add in the cost of skilled help, such as physical therapy, the costs can be much higher.

Long-term care—whether in a nursing home, assisted living facility, or your own home—usually is not covered by health insurance except in a very limited way. Medicare generally doesn't cover long-term care.

Long-term care insurance can help protect you from the high costs associated with this type of care. Most long-term care policies pay a fixed dollar amount, which can vary quite a bit-from as little as $40 a day to more than $200 a day. The daily benefit for at-home care usually is about half of the benefit for nursing home care.

In order to get the lowest rates, you should apply sooner rather than later for long-term care insurance. Your age and any medical conditions you may have will affect your eligibility for coverage and how much it will cost (the premium). Recent changes in Federal law may allow you to take certain income tax deductions for some long-term care expenses and insurance premiums. In addition, some States may give a partial deduction or credit toward State income taxes for these costs.

Traditionally, the annual rate of increase in the cost of long-term care services has risen more quickly than it has for other consumer services. This means the benefit you buy today may not be enough to cover higher costs in the future. You can choose a plan with an inflation adjustment feature so that you can be protected against the rise in long-term care costs over time until services are needed.

Long-term care insurance may be offered where you work, or you may be eligible through a union, fraternal group, or other organization to which you belong. In addition, many life insurance companies offer long-term care insurance directly to the consumer.

Disability Insurance

Disability insurance replaces income you lose if you have a long-term illness or injury and cannot work. This is an important type of coverage for working-age people to consider.

Disability insurance is not usually considered a form of health insurance, and it doesn't cover the costs associated with rehabilitation following an injury or illness. Often, these costs are covered under the major medical part of your health insurance plan. Benefits paid under a disability plan can be used for expenses at the discretion of the insured, for example, rent, utilities, or groceries.

Some employers offer group disability insurance. Check with your employer to find out if this coverage is available. Disability insurance will be less expensive if your employer contributes toward the cost. Many different kinds of individual policies are also available. Contact your insurance company to find out if it offers disability insurance coverage.

Supplemental Insurance

Different types of coverage are available to you that pay benefits when specific types of events occur, such as hospitalization or critical illness. This coverage usually will pay a cash benefit that can be used to cover additional expenses that you incur due to the event. This type of coverage may be available from your employer or directly from an insurance company.