Making sure all of your family’s medical needs are covered while keeping the cost within your budget is a big task. And the more people on your plan the more likely it is you will have to deal with unexpected illness and injury. Making sure you understand the ins and outs of family health insurance plan is the key to getting the right coverage. And unfortunately, too many families choose to forgo health insurance altogether, which leaves them vulnerable.
According to the 2020 U.S. Census, 91.4% of households had health insurance, while 8.6% of families lacked coverage, so if you are among those 8.6%, it’s important to learn about the family plans that are available, so you can get your family the coverage you all need.
Differences Between Family Plans and Individual Plans
The primary difference between family plans and individual plans is the number of people they cover. A family plan includes every member of your family that you want to cover. It’s usually you, your spouse, and any children in your household who are under 26.
Family health insurance and individual policies can also differ significantly from one another when it comes to out-of-pocket maximums. Family health insurance policies may feature a family-wide out-of-pocket maximum. But in some cases, each member on the plan has a separate out-of-pocket cap.
In addition, the prices of individual versus family health insurance are generally very different. A family health plan often costs more since it covers more people. But you might find that you pay less per person than you would for an individual plan.
Types Of Family Health Insurance Plans
Family health insurance plans generally come in two types: “indemnity” or “managed-care” plans. In general, these types of plans differ in three key ways: their out-of-pocket expenses, bill payment methods, and choice of healthcare providers.
In general, indemnity plans provide a wider range of options for healthcare professionals than managed-care plans do. But in exchange for the flexibility of choosing any provider you want; you may have to pay up-front for services. And then obtain reimbursement from your health insurance company.
Managed-care family health insurance plans come in a variety of forms, including HMO, PPO, and POS plans. With these types of plans, you will generally have a network of healthcare providers that you can see. These providers have agreed to offer treatments at pre-negotiated prices for patients enrolled in the plan. The majority of the time, medical professionals in this network will submit your claim to the insurance carrier on your behalf.
With a managed-care health insurance plan, you’ll typically have less paperwork and fewer out-of-pocket expenses. While an indemnity plan will give you a wider selection of healthcare providers.
There are some differences between types of managed care plans:
- Health Maintenance Organization (HMO) – HMOs typically provide members cheaper out-of-pocket medical costs, since they often have little-to-no deductible, as well as lower copayments. They are also more likely than other types of plans to cover a wider range of preventive care. In addition, you won’t have to submit any of your own claims to your insurer. In exchange, though, HMOs offer less flexibility in terms of the doctors and hospitals you can use than other health insurance plans. You have to select a primary care physician (PCP) if you join an HMO. This PCP will handle most of your healthcare needs. And you will be required to get a referral from your primary care physician (PCP) before you can see a specialist. Any services provided by non-network providers, or those provided without a valid referral from your PCP, will probably not be covered at all by your insurance.
- Preferred Provider Organization (PPO) – This type of plan also has a network of providers, but you do not have to see only those providers. With that being said, your insurer will encourage you to stay within the network. Since these medical professionals have contracts to offer reduced services to the plan’s participants. PPO plans often cover out-of-network doctor’s services. But at a lesser percentage than those provided by a doctor in the network. With a PPO, you generally won’t have to select a primary care physician. Instead, you can choose to visit any specialists and general practitioners in the network. In terms of out-of-pocket expenses, you will generally have an annual deductible to meet. Additionally, you could have to pay a copayment for specific services, and coinsurance, or a set percentage of the overall cost of your medical expenses.
- Point Of Service (POS) – POS plans often combine features of HMO and PPO plans. For example:
- Members of a POS plan may have to select a primary care physician (PCP) from the plan’s provider network. Just like with an HMO. Your PCP’s services may or may not have a deductible attached.
- Generally, if your PCP refers you for services, you’ll get a higher level of coverage.
- POS plans often provide coverage for preventive care visits, just like HMOs do.
- Non-network services could have a deductible and lower reimbursement. You’ll most likely have to pay up front and submit a claim to the insurance company yourself if services are provided outside of the network.
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The Cost of Family Health Insurance
It should come as no surprise that the more family members covered by your health insurance plan, the higher your premium rate will be.
The average monthly premium for a couple in their 40s is $954, which is double what it would be for an individual in that age bracket. But adding children isn’t quite as straightforward. A family of five would pay around $1,782 per month, and a 40-year-old couple with one child under 14 would pay around $1,230.
Some examples for estimated rates for families of different sizes as of 2022 include:
- $1,230/month for a couple with 1 child
- $1,505/month for a couple with 2 children
- $1,782/month for a couple with 3 children
In most cases, it makes sense for families to purchase health insurance together, simply because it’s more convenient and easier. In addition, you have a higher chance of reaching your plan’s out-of-pocket maximum if you are all on one plan. After which you shouldn’t be responsible for any out-of-pocket expenses for covered treatments.
Some families, though, might fare better with separate coverage. It might make sense for one spouse to use employer-provided insurance while the rest of the family enrolls in a Marketplace plan, for instance. This might be true if one spouse can obtain affordable coverage through their employment. But if that plan is not available to family members (or adding them is too expensive). Or, one partner may benefit from paying more for additional coverage if they have more medical demands and expenses. If the other partner doesn’t need much medical attention, they might do better with a high-deductible plan for themselves.
Things To Consider
When looking for family health insurance, there are more factors to take into account than if you were looking for individual coverage. You should consider the following factors:
- Premiums – The monthly payments you must make to maintain your family plan are known as premiums. You’ll need to decide whether paying one premium for your whole family is better for you than paying for each family member individually.
- Deductibles – The sum of money you must pay out-of-pocket before your health insurance begins to pay is known as your deductible. Once you reach this amount, your plan will cover any further medical expenses you incur during the course of the year. Having a higher deductible will mean lower premiums, and vice versa. You’ll have to determine whether family members will have separate deductibles to reach with your plan.
- Miscellaneous costs – You need to also take into account some additional expenses related to family coverage, like copayments and coinsurance. A copayment is a set amount of money you must pay for a covered service before or after your deductible has been met. Coinsurance is a portion of the cost of covered treatments that you pay after your deductible has been met. You pay this up to your out-of-pocket maximum. Your family health insurance will cover all of the costs of your covered benefits for the remainder of the year once you have reached your out-of-pocket maximum. As pointed out above, out-of-pocket maximums can work differently for family plans than for individual plans. And might make a family plan worth it for you.
Although a plan with a lower premium and higher deductible could first sound appealing. You must keep in mind that you are looking for health insurance for your dependents, as well. Given that one plan covers many people’s healthcare requirements. You might want to seek a family plan with a larger monthly premium and a smaller deductible when purchasing health insurance for children.
The Bottom Line
Family health insurance is essential because it makes it possible for your family to get the medical treatment they need. Emergency facilities are required by law to treat uninsured patients. Yet, visiting an emergency room without insurance can result in very large bills.
While the Emergency Medical Treatment and Active Labor Act (EMTALA) requires anyone with an emergency to receive appropriate care regardless of insurance status. Medical professionals, by law, do not have to continue treating you after they address the emergency. For example, A broken bone (even a broken finger) would likely qualify as an emergency medical condition under EMTALA. Because delaying getting the broken bone cast or in a splint would likely result in serious bone malfunction. On the other hand, the hospital can discharge someone with the flu or an ankle sprain after receiving an initial medical assessment.
Or if an uninsured pregnant woman comes into the emergency room for pains. If the medical assessment is that she is not in actual labor, then she does not meet the EMTALA requirements. This means the emergency room can discharge her without any additional help unless she also has another serious medical condition putting her life in danger.
This means that you might not be able to get the necessary medical care for your family without health insurance. Additionally, it will be difficult for you to get the preventive treatment that is vital for your health. Family health insurance plans might seem expensive up front. But they protect your family’s health and your financial stability when compared to the financial danger of going without insurance.