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While the choice of health insurance in the USA often comes down to a difficult compromise between the extent of coverage – and out-of-pocket expenses -, flexibility in the range of care offered and the amount of the premium, a new type of contract has appeared in recent years: “self-pay” plans. Self paid plans aim to combine flexibility, reduced premiums and, above all, allow for substantial savings when you visit a doctor or hospital. These plans are currently offered exclusively by two international health insurance companies, and are proving increasingly popular against a backdrop of exponentially rising healthcare costs.
At first glance, “contract” and “self-pay” may seem contradictory. In fact, the two concepts are often presented as opposing alternatives when it comes to choosing health cover, each with its own advantages and disadvantages. So let’s start with a reminder of how the US healthcare system is organized.
No French-style Sécu in the USA
In a country where healthcare is a business, with rules and fees – among the highest in the world – that can vary considerably from state to state, there is no public health insurance similar to the French Sécurité Sociale, based on principles of solidarity and equal access to care. The subject continues to be a regular topic of debate in the U.S. Congress, and the initiatives adopted on the issue remain limited:
Medicare, for seniors
Medicare, which is structured around several “plans”, is a federal health insurance scheme created in 1965 and aimed at people over 65 (plus other specific categories of people with disabilities), covering most hospitalization costs, nursing care, palliative care, home care, doctor’s visits, etc. The program also covers certain medical benefits, such as the right to a doctor’s appointment. The program also covers certain medical services, such as ambulance services, outpatient care and durable medical equipment. Nearly 60 million people benefit from the Medicare program.
Medicaid, for low-income earners
Medicaid is a medical assistance program for people on low incomes. Eligibility requirements vary from state to state. The program covers consultations with a general practitioner, hospitalization, preventive care and, in some states, vision correction and dental care. With the passage of the Affordable Care Act, better known as Obamacare, some 75 million Americans are now eligible for Medicaid.
Private insurance: a must when it comes to healthcare costs
In the United States, when you are not eligible for public health insurance programs – Medicare or Medicaid, among others – or when you need to supplement them, you can turn to private insurance. This is the case for nearly 70% of Americans, in most cases via their employer, who then pays most of the premium, which the employee also contributes to, in the same way as French company mutuals.
The fact remains that not all private health insurance policies are created equal, from the range of treatments covered, to the levels of cover, the amount of deductibles payable and the freedom of choice in access to healthcare professionals. All of these factors influence the cost of your annual premium, and can vary considerably from one contract to another.
The myriad of health insurance plans on offer in the United States can be difficult to navigate. The parameter most often taken into account to differentiate them is the notion of health networks, through several categories of insurers, the main ones being HMOs (Health Maintenance Organizations); PPOs (Preferred Provider Organizations); and IIs (Indemnity Insurances).
HMO (Health Maintenance Organizations)
In the case of an HMO health plan, the insured is covered only if he or she uses the networks of healthcare professionals, providers and facilities with which the insurer has signed agreements. Otherwise, except in the case of emergency care, the insured will not be reimbursed.
PPO (Preferred Provider Organizations)
With PPO health insurance, the health plan offers a little more freedom. As with HMO health insurance, the policyholder has access to one or more networks of practitioners and facilities, which he or she is encouraged to favor. They will also be covered if they wish to use a professional from outside the network, but in this case the deductible will be much higher.
II (Indemnity Insurances)
Type II insurers do not have agreements with healthcare networks. In this case, you pay according to the extent and types of risks you wish to cover. Freedom of choice, which unsurprisingly translates into an insurance premium that can quickly soar.
Of course, while the different categories of health insurance companies available in the USA allow you to assess your degree of freedom when it comes to choosing healthcare professionals, providers and facilities, the annual cost you’ll have to bear will depend heavily on the terms and conditions of your contract. The table of benefits refers to the following expressions for each type of benefit:
Copay and Coinsurance
Copay and Coinsurance correspond to a classic notion in an insurance contract: the deductible. In this case, it’s the amount you have to pay for each of the procedures and treatments covered by your health insurance contract. Copay is a fixed amount, while Coinsurance represents a variable portion (expressed as a percentage).
Deductible
The Deductible is a fixed annual deductible: only after you have paid this amount yourself for care and/or treatment – without any reimbursement – will your insurer begin to reimburse subsequent healthcare expenses – to which the Copay and/or Coinsurance penalties (deductibles) will then be applied.
Out of pocket
The “Maximum Out of pocket” corresponds to the maximum amount you have to bear in the form of deductibles, over one year. Beyond this amount, you will be 100% reimbursement. It should be noted that while the contract provides for a relatively low “out-of-pocket” benefit, the annual premium is higher.
As the cost of healthcare in the United States continues to break records, year after year, some Americans forgo taking out a private insurance policy, and must therefore cover all their healthcare expenses themselves. This is known as “self-pay”, and health care practitioners and institutions offer patients rates that are 30 to 80% lower than those charged for private insurance coverage.
More savings and more freedom with self-pay contracts international health insurance
While it is forbidden to benefit from “self-pay” rates when you are covered by private American health insurance, international health insurance companies are free to offer this practice as part of a contract. Although only a small number of companies have yet launched self-pay plans, the initiative is proving a real success, particularly with expatriates.
The principle of self-pay plans combines the advantages of international health insurance (extensive cover, no deductibles, applicable worldwide), the freedom of a contract with no limits on professional networks or establishments, and above all, unbeatable rates for access to care.
Naturally, self-pay means paying in advance, but here again, international health insurance companies stand out for their speedy reimbursements, a decisive factor in the success of the self-pay contracts launched two years ago.