Health Insurance Articles
How Location Can Affect Your Insurance Coverage
2011-01-07
Finding appropriate insurance coverage is difficult in the best of circumstances. As insurance companies continue to look for ways to maximize profits and to reduce costs, location based health insurance is becoming more popular. Insurance carriers have begun to factor the area where an individual or business is located into determination of insurance premiums.
Nationwide, individuals in rural communities are slightly more likely than individuals who reside in urban communities to have insurance coverage. However, this statistic is misleading; as rates of coverage vary widely between states. US Census data indicate that individuals who reside in rural counties in Texas are less likely than the national average to have health insurance coverage. Additionally, although individuals residing in rural areas are more likely to have insurance coverage, they also pay a greater percentage of their monthly income towards their health insurance coverage.
Individuals residing in rural areas may also struggle with locating providers in their areas that take specific health insurance plans. People who reside in rural areas pay a greater portion of their income in out-of-pocket expenses as they are unable to find network providers for larger insurance carriers.
In larger states, location based health insurance is more prevalent. In California, choices of companies from which an individual might purchase insurance are determined by which part of the state the individual resides. Health insurance carriers in California base pricing of premiums on the zip code of the employee being insured. Zip code of the location of the headquarters is considered the benchmark for out of state or out of area employees. Thus, health insurance pricing will differ based on zones created to determine the cost a member might bring in claims.
Small group health insurance plans may be offered in specific locations in order to take advantage of regional or local needs. For instance, individuals who reside in towns that border Mexico may have access to plans that allow them to receive health care in both the US and Mexico. Small, niche companies may offer health insurance based on the needs of individuals in specific locations. They refrain from contracting with large market hospitals and limit coverage to the hospitals and providers of their local area.
Location based health insurance contributes to the difficulties experienced by small businesses in providing coverage to their employees, particularly when premiums are based on zip codes. Location of suitable coverage for those living in rural areas is also a concern. Passage of the Affordable Care Act will assist in addressing inequities in the health insurance system. Movement continues toward a unified health care system in which location based health insurance may become a thing of the past.
