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Getting the Most Value for Your Premiums
When you see your insurance premium taken out of your paycheck every month, do you ever wonder where the money goes? Maybe you don't. Maybe you are more worried about how to make the money you did get stretch all the way to the next payday.
Indeed, most of us probably don't spend much time thinking about whether we are really paying for affordable health insurance or simply lining the pockets of insurance CEOs sitting at the top of the company's hierarchy.
The good news is that someone is finally on your side, asking where your premium is going. The current healthcare reform even goes beyond simply asking what happens to the money; it is telling insurance companies where that cash needs to go. Guess what? It isn't into the pockets of healthcare CEOs! Instead, healthcare reform is insisting the bulk of that premium goes to high quality health care that you need to stay healthy throughout life.
The Dollars and Sense
It makes sense, right? You are paying money for affordable health insurance coverage, and you want to make sure your dollars are truly going into the quality of your care. Of course, some money needs to be spent on administrative services the insurance company provides, but how much? According to the federal government, only about 15% in most cases. This healthcare reform provision mandates that insurance providers for employers with 50 or more employees spend 85% of the premiums they collect on health care services and health care quality improvement.
Smaller plans used by individuals and small businesses have slightly different guidelines. These affordable health insurance providers must allocate 80% of their premiums for health care services and improvements. This rule would apply to individuals who purchase their own health insurance for themselves or their families or for small businesses with less than 50 employees.
Paying the Piper
Those smaller percentages can be used by insurance companies to pay for administrative expenses, marketing and other non-health-care related costs. The rest should go to strengthening the quality of health care so those with affordable health insurance can use it to get the best care possible. Companies that go over the limits allotted by the federal government have to pay the money back. Know where? To you, of course! The consumer actually gets a rebate check if the company doesn't spend wisely.
Keeping Watch
To ensure insurance companies abide by the new rules, the government will be keeping watch. Insurance companies will now be required to report annually to the Secretary of Health and Human Services on what they spend on administrative expenses and what they spend on you. When the numbers don't jive, rebate checks will be issued without fail.
In addition, the government will be keeping close tabs on rate hikes. If your health insurance provider suddenly becomes a lot less affordable with steep premium increases, they will need to justify those hikes to regulatory agency. This gives the consumer peace of mind in knowing their interests will be protected.
Affordable health insurance will be much more attainable if insurance companies are held accountable for the quality of service they provide. With set limits on administrative spending and a close watch on premium increases, consumers will enjoy a greater value from their health insurance dollar.
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