Health insurance is a category of insurance that covers a portion of the costs of an insured individual's health expenses, including both medical and surgical costs. There are several different types of health insurance available and depending on the coverage, either the individual who has sought out medical services pays any costs out-of-pocket and is reimbursed by their insurance company, or the insurer directly pays the provider. Wirefly makes it simple to compare health insurance rates and get a free online quote.
Health insurance is usually available through employers or private insurance. It is also available to senior citizens through Medicare and to low-income individuals through Medicaid. Both Medicare and Medicaid offer health insurance at a lower cost than private insurance.
This type of insurance is available with various levels of coverage. An inexpensive plan may only cover catastrophic events, while a high-cost plan would offer full coverage. People usually anticipate their health care needs before choosing a health insurance plan.
An individual's future health care needs are unpredictable, so it may be difficult to correctly determine how much health coverage you need for the upcoming year. It is best to use the past as an indicator for the future to make an educated guess as to what you may need in the future. For example, if you tend to be relatively healthy and do not visit your primary care physician or a specialist on a regular basis, you can probably get sufficient coverage from a low-cost plan. However, if you suffer from a chronic disease and find yourself in a doctor's office on a regular basis, then you will want to look into insurance that offers a wide range of coverage.
One of the lowest priced health insurance plans is catastrophic only insurance. This is for people who hardly ever visit the doctor and only want coverage in the case of a severe emergency. Alternatively, if you are often traveling or participating in dangerous activities, you will need an insurance plan that covers ER visits and regular trips to see the doctor.
Higher coverage typically comes with a higher monthly premium. This means that the more you pay each month, the more your insurance company will pay towards your healthcare needs. This is why it is important to consider your lifestyle and health history to help figure out the most economical choice for your needs. Make sure you have the basics covered and add more coverage as you feel necessary and as you can afford it.
There are several types of health insurance available. While they may offer similar levels of coverage, their flexibility and convenience of use may vary greatly. Some choices include an HMO, a PPO, a POS, an HSA, an HRA, an FSA, and an MSA. This may seem confusing, but it is important to realize the basic differences prior to selecting a plan.
HMO stands for Health Maintenance Organization. This type of network requires the insured to choose a primary care physician to be the gatekeeper for all of your health-related needs. So, if you need to see a specialist, you must go to your primary care physician first in order to obtain a referral to a specialist if your primary care doctor deems it necessary for you to see one. While HMOs usually have lower premiums than other plans, the network of doctors that is available to the insured may be limited because some doctors do not accept HMO insurance plans. The good thing about HMO plans is that there are no deductibles and the out-of-pocket costs are often reasonable.
A PPO plan (Preferred Provider Organization) typically has a large network of health care providers that participate. The insured is able to choose any primary care doctor within the network and visit specialists without a referral. Visiting doctors and hospitals that are in-network will give you the best financial coverage, however, you can get partial financial assistance for costs that are out of network as well. PPOs typically have deductibles, co-payments, and limits to how much you can spend each year out of pocket.
A Point of Service plan (POS) incorporates a combination of benefits of HMOs and PPOs by offering a decent sized network of doctors from which to choose your primary care physician. As long as you stay within the network, the insured does not pay any deductibles and the co-payments are low. However, if the insured needs to see a doctor who is out of the network, the co-payments and deductibles are high.
There are also a few non-traditional approaches to health insurance, including a Health Savings Account (HSA), a Health Reimbursement Account (HRA), a Health Flexible Spending Arrangement (FSA), and a Medical Savings Account (MSA). These accounts all operate on the premise of you or your employer setting money aside in a tax-exempt savings account for all medical-related expenses. The money that is set aside can be used to pay for prescriptions, doctor’s visits, surgical treatments, and in some cases, over the counter medications. These plans come with a lot of flexibility regarding how the money is used and some plans even allow any unused money to roll over to the next year.
Having a Health Savings Account does require a high deductible plan, however, it is very flexible. The employer and the employee can both contribute to this plan without limitations. The money that is set aside stays with you and can even be used for non-medical expenses, provided income tax is paid on the savings.
A Medical Savings Account is similar to a Health Savings Account, however, it is for people who are self-employed.
Alternatively, a Health Reimbursement Account is only funded by an employer, so there is no way to move the account around. The employer does not have a set annual contribution limit and has full control of the rollover protocol.
Health Flexible Spending Arrangements are funded by the employee with pre-tax earnings. An employer can add additional funds to this account, but if the money from the employer is not used before March 15th of the following year, the money remains with the employer. In this type of account, the funds cannot be moved or used for any non-medical expense.
A premium is the amount of money you pay each month to have insurance coverage. This money is never returned to you, regardless of whether or not you use your insurance. A deductible refers to the additional money you are required to pay to any health care providers before your insurance company starts to pay their promised portion of any medical expenses.
Deductibles are different from out of pocket costs. While a deductible refers to your annual financial responsibility before your insurance begins to pay, out of pocket refers to how much money you will spend before the insurance company will pay 100% of your bill.
Deductibles and out of pocket costs typically start over each year, with the previous year's expenses having to impact on these moving forward. This means that if you have a deductible of $4,000 and you spent $2,500 out of pocket last year and you keep the same insurance plan when the insurance renews, your out of pocket expenses are reset to $0 and the $2,500 you spent last year does not roll over. Some plans are an exception to this rule and allow you to rollover your paid deductible amount from the previous year towards the deductible for the first quarter of the new insurance year.
Co-payments, or co-insurance, refers to your financial responsibility of a medical visit or service. If your co-payment to see a primary care physician is $20, then every time you see your primary care physician, you pay that $20. The insurance then covers the balance if the services rendered are covered on your plan. Co-payments are not applied towards a deductible.
Your insurance company may also give you a maximum lifetime benefit. This refers to the maximum amount of money that your insurance company will pay in total for your health care. Once this maximum is reached, the insurance company will no longer pay any medical claims.
Your employment status has a large impact on the health insurance plans that are available to you. If you work for a large company, you will likely qualify to get on their group health insurance plan. This is typically more affordable than seeking individual health care, but no one is required by law to participate in group health insurance plans.
If you are self-employed or unemployed, you have the option of purchasing private, individual health insurance. If you are a senior and do not work, you are able to receive financial assistance through the government with Medicare. Low-income individuals have the option of applying for government assistance as well, which is called Medicaid.
It is important to check with your doctor to see which health insurance plans they accept if you want to continue to see a specific doctor. Also, be sure to let your doctors know if your insurance plan changes, and check with your insurance provider regarding any specific questions about your coverage.
