Unpacking US Health Insurance for Immigrants

Unpacking US Health Insurance for Immigrants

May 11, 2023

For those new to health insurance, just thinking about all the options can be daunting. Even when given just a couple of choices, most people are unable to confidently choose the option that is right for them or their family. When broken down into parts however, insurance is actually fairly easy to understand.

To begin to understand insurance, you must first understand networks. A network determines which doctors you are able to see and under what conditions. Basically a network such as Aetna will call every doctor in America and ask them to join. The doctor will gain access to all Aetna network clients in exchange for giving a discount on his posted rates. A hospital must, by law passed by President Trump, reveal every price from every network they accept, but doctors do not. Reasons a doctor may refuse to join a network include difficult filing procedures or low compensation for services.

NETWORK TYPES (From least to most flexible)

  1. HMO - These are typically local networks of doctors, meaning that in most cases even if you have the same HMO you cannot use it out of state. You must choose a primary care doctor and if you need to see a specialist, you must be referred to that specialist by your doctor.
  2. POS - These networks are typically larger and give better benefits than HMO’s, however you must still choose a primary care doctor and you will need referrals to see a specialist.
  3. EPO - These networks may or may not be larger than HMO’s and typically cannot be used out of state, however in most cases you do not need to choose a specialist and you can use any in network specialist without a referral or permission from your primary care.
  4. PPO - These networks offer the most flexibility and do not require choosing a primary care doctor. They are also typically much larger than the 3 above and can be used out of state. You also do not require a referral or permission to see a specialist. Unfortunately, these are usually reserved for the top tier group and private plans, although there are a few states where this type of network is available on the ACA.


INSURANCE TYPES

ACA Insurance - Also known as the Affordable Care Act, Obamacare or Marketplace plan. These are plans offered by the federal government. The prices tend to be extremely expensive if you earn a decent wage or extremely inexpensive if you have a low income. They accept everyone and can be purchased from Nov 1st to Dec 15th unless you have a special enrollment event (talk to your agent)

Pros

  • No pre-existing condition exclusions
  • Very cheap if your income is low
  • One of the few plan types that covers pregnancy, mental illness and drug addiction

Cons

  • Very expensive if you earn a decent income
  • Limited network choices. Typically only HMO with a few areas offering EPO (POS and PPO is rare)
  • Very high deductibles and very little coverage unless you have a low income assistance plan or choose the gold or platinum tier with premiums higher than a mortgage.

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Private Insurance - Sometimes referred to as Short Term Plans these are the same plans that were available prior to Obamacare. They must be approved by each state which means in many cases the Democrat states that want to push Obamacare will not approve them. These plans are not based on income so they tend to be a lot less expensive than the ACA if you earn a decent wage. They do have limitations and with a few exceptions (AKA permanent coverage / talk to your agent) can be purchased for 1-3 years minus a day at a time, although you can also re-enroll after they expire if you still qualify.

Pros

  • Usually come with PPO networks
  • Can have extremely rich benefits depending on plan choice
  • Are income independent so can be much less expensive

Cons

  • Will not cover pre-existing conditions there are exceptions (talk to your agent)
  • The Short Term versions cannot be renewed if you had a critical illness during your coverage period again there are exceptions
  • Are underwritten which means something like cancer, heart attack or being currently pregnant will result in denial of coverage although any new critical event will of course be covered.

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Indemnity Insurance - These pay a specific amount for each covered event. There is no pros section for these plans (except supplements) because they are extremely dangerous. The specific amounts tend to be low and while they pay a portion of doctor and urgent care visits, that is not the reason we buy insurance. These plans can leave clients with huge amounts out of pocket and are usually pushed by unscrupulous agents because the commissions are high. There are of course exceptions such as plans that pay an indemnity for the little things such as doctor visits, but switch to a real pay scale for surgeries, but we would typically group these under Private Insurance with an Indemnity element rather than under full Indemnity plans.

Pros 

  • If offered as a supplement they tend to be inexpensive and can cover the deductible of a real plan

Cons

  • Can leave a family bankrupt.

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Health Sharing Plans - AKA ministry sharing or Christian plans. We use the word plan rather than insurance because legally they may not be called insurance. A real insurance plan must have a re-insurer so if there are excessive claims a second bank that specializes in re-insurance will cover the bills. Even the largest health insurance company in America, UnitedHealthcare must have re-insurance. Sharing plans claim to pool money from members and use that pool to pay claims, however here is just the latest example that left thousands of families devastated when the pool ran out of money and families were left high and dry: https://www.christianitytoday.com/news/2022/april/health-care-sharing-ministries-bankrupt-sharity-trinity-unp.html

Most agents will still write these plans for people who trust god will take care of their bills. This does not make the agent unscrupulous, unless they fail to also explain the potential danger of having this plan.

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CONCLUSION

Basically this leaves people with 3 choices; Private plans of which there are over 50 nationwide or ACA plans of which there are from 5 to over a dozen depending on where you live. There is also Medicaid but this really isn’t a choice. If you earn under $14,000 a year, this government program will take care of you until you get back on your feet.

When it comes to individual plans, (both private and ACA) the price is set by each insurance company. Your rate will be the same regardless of if you call the company directly or use an insurance agent. While agents are paid a criminal amount of money, that money does not come out of your pocket and they can typically save you money by showing you how to combine plans in a way that is not only less expensive but also results in better coverage. 

In closing, always use an agent, and if your agent seems deceptive, refuses to be transparent or is simply unpleasant to work with, there are 400,000 other agents to pick from, just make sure you use one that refers to themselves as a broker so you know they have multiple plans to choose from.

Compliments: Steve Zatuchny (Insurance Next Door) steve@insurancenextdoor.com 

Caleo Capital USA (Caleo Capital NA LLC) are an integrated wealth advisory and asset management firm that serves high-net-worth South African families who have relocated or are planning relocation to the United States. Emigration and relocation is complex both administratively and emotionally, with so many aspects to consider. Financial planning for the average high-net-worth individual is no simple task, but tax, retirement, trusts and estate planning is even more complicated when your financial life spans international borders. Caleo Capital has established relationships with reputable partners who assist with a range of challenges facing newly immigrated clients.

Caleo Capital USA (“Caleo”) is a State Registered Investment Advisor.  Caleo and its affiliated persons only conduct business in those states in which it is lawfully registered or exempted from registration. This material is for discussion purposes only, and Caleo is not soliciting any action based upon it. This material does not constitute, and is not to be considered, an offer to sell or a solicitation of an offer to buy any product, security, advisory, risk management, or other service mentioned herein. It has no regard to the specific investment objectives, financial situations or particular needs of any specific recipient.  This material is not to be construed as investment advice nor is it intended, to constitute legal  or tax advice. Be sure to consult with  legal and or tax professional before implementing any strategy. For information regarding Caleo’s business operations, services, fees and registration status, please contact the firm or visit https://adviserinfo.sec.gov/ and search for Caleo  or for CRD #308542.