Health Insurance Basics: Why is Health Insurance Important? – Medical insurance. It may not be one of the most exciting thing to look for, however it’s one of one of the most important points that you can get for you and your family. Below are 2 excellent reasons why. One, it saves you money on health care. Whether it’s your yearly physical, emergency care, or a prescription medication, health care can obtain rather costly.
Go to the physician that typically. Accidents happen and also anyone can get ill, so it’s finest to be prepared -it assists you remain healthy. Check-ups, testings, examinations, as well as booster shots all can assist prevent serious medical problems later on. The good news is that all medical insurance plans cover certain preventative services at no expense to you when you use an in-network provider.
Some strategies also supply totally free brows through for nourishment therapy as well as value-added health cares like reimbursement for health club charges as well as discounts on physical fitness gear as well as programs that aid you slim down or quit cigarette smoking. So how can you obtain medical insurance if you don’t get health insurance via an employer? You can acquire it
Straight from a medical insurance company or you can look for a strategy via the health and wellness insurance policy market. Worried concerning the cost? Many individuals certify for lower month-to-month rates or help with out-of-pocket costs.
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Health Insurance Basics: Why is Health Insurance Important?
Well her first step is simple: understand how health insurance works. Like all insurance, in return for a monthly fee called a premium, health insurance reduces the costs associated with a risk, in this case, excessive medical bills due to sickness or injury. However, unlike other forms of insurance, health insurance premiums are unique: theyre only based on a few factors, like age, location, and smoking habits, and not on your health status.
That means if you have a pre-existing health condition, like diabetes or asthma, your insurer cannot raise your rates or deny you coverage. That is undeniably great for consumer, though health insurance also has a lot of problems, mainly the confusing jumble of terms: HMO, deductibles, the list goes on and on.
Lets walk through an example. Lets say Susie has a $200 monthly policy with a $1,000 deductible, 20% coinsurance, and a $5,000 out-of-pocket maximum. Lets also say she recently broke her leg playing soccer and has just been stuck with a $100,000 medical bill.
Yikes! How much of that enormous bill does she have to pay? Lets start with the deductible first.
A deductible is simply the amount of money Susie must pay each year before her insurer starts paying their share. Susies plan has a $1,000 deductible.
Types of Plans Health Insurance
If sussie has started to understand the basics of insurance. However, she remains baffled by the general jargon of health insurance: HMO, Gold Plan, the list goes on and on. However, luckily for Susie, weve got her covered.
Lets start with the metals. Most insurance plans youll see are listed with an associated metal: bronze, silver, gold, or platinum. Each metal is in turn associated with an actuarial value. While that term may seem rather mathy, an actuarial value is simply the average percentage of medical costs your insurer pays each year. For example, bronze policies have an actuarial value of 60%.
That means, on average, insurers pay for 60% of their policyholders medical costs. For silver, its 70%, for gold, it’s 80%, and for platinum, the highest metal, its 90%.
However, theres a wrinkle in this neat hirecharcy: catastrophic plans. These are plans are only available to those below 30 years of age or to those with hardships exemptions, such as filing for bankruptcy or being homeless. These plans cover very few routine expenses, like prescription drugs, making them a risky option.
So which plan should Susie choose? Well, when deciding between metals, it is important to understand that these categories have nothing to do with the quality or amount of care you get. All metals provide exactly the same healthcare benefits. Instead, the only thing they differ on is the actuarial value. Worse metals come will come with lower monthly premiums, but will cover a lower percentage of healthcare costs.
Better metals provide the opposite. Thus, as you can see, metals and actuarial values are a great way for Susie to understand her expected healthcare costs. However, with that being said, there is another factor that determines your healthcare costs: the type of plan you have, of which theyre four: HMO, EPO, PPO, and POS.
HMOs and EPOs are by far the strictest, as they only cover the cost of the healthcare received within their provider network, which is a network of hospitals and clinics they have a contracts with. In addition, all health care received in an HMO, though not an EPO, must be coordinated through a primary care physician.
This means if you need to be looked at by a specialist, like a cardiologist, or need any tests done, like an X-ray, you cannot get coverage in an HMO without a referral from your primary care physician. These traits can make HMOs, and to a lesser extent EPOs, restrictive, though they do come with one major benefit: cost.
HMOs and EPOs generally have the lowest costs of any health care plan. Plus, theyll always cover true medical emergencies, even out of network. PPOs are the third type of plan.
With a PPO, you can visit any provider without a referral, both inside and outside your network. This flexibility can make PPOs a good choice for some, though be warned, their costs are higher than other plans, plus out of network care will always be more expensive. Finally, we have POSs. They can be thought of as a mix between HMOs and PPOs. Like PPOs, they cover out of network healthcare, and like HMOs, they center around a primary care physician.
This combination of traits makes them less expensive than PPOs but more expensive than HMOs.
How to Get Health Insurance?
So now she understands how health insurance works. However, she still has no idea how to get it. What should she do?
Well, lets first cover the good news. Many employers already provide affordable health insurance, not to mention Susie can continue stay on her parents health insurance plan until she turns 26. This is true even if shes married, moves out of her parents home, or is no longer claimed as a dependent on her parents tax returns. However, for our purposes, lets say Susie is unable to stay on her parents health insurance and her employer-sponsored plan isnt great.
What should she do?
Well, Susie still needs health insurance, especially because theres a sizeable annual penalty for not having it. However, thanks to the Affordable Care Act, its now very easy for Susie to find great health insurance plans, either through our recommend website or through healthcare.gov. Then, once Susie finds her desired plan, she can then easily complete the application online, where she may even automatically qualify for a federal subsidy that lowers the cost of her insurance, so long as her income meets a certain threshold.
However, there is a catch to all this good news.
Unless Susie qualifies for Medicaid, the government’s health insurance plan for low-income individuals, she can only apply for health insurance during open enrollment, which lasts from November 1st to January 31st. Outside of it, Susie can only apply for health insurance within 60 days of whats called a qualifying life event, such as moving to a new state, getting married, having a baby, or involuntarily losing your existing health insurance coverage.
Finally, now that Susie understands how to get health insurance, as long as she follows these six rules she should be set for the future:
- Rule 1: Make sure the insurance plan youre considering has coverage in your area.
- Rule 2: Be sure to read the fine print of any health insurance plan youre considering,
- Rule 3: If youve picked a high deductible insurance plan, we recommend opening a Health Savings Account, in which you can deposit money tax-free to pay for qualified medical expenses.
- Rule 4: Once youve finished your insurance shopping, youll need to find a great primary care physician in your insurance network and book an annual physical, both of which you can do easily using our recommended website. Once booked, be sure to arrive to your appointment early and always bring your photo ID and insurance card.
- Rule 5: Once youve received your medical bill from your provider, be sure to compare it with your Explanation of Benefits, which is a document, not a bill, that explains how much your insurer paid your provider. Should you find a mistake on either one, like a duplicate charge or wrong insurance information, be sure to call your insurer and provider immediately. And dont worry, if for whatever reason you still cant pay your medical bill, youre not out of options. You can either contact your insurer and provider and ask for assistance, or use the website GiveForward to crowdfund your medical expenses from your friends, family, and even strangers.
- Rule 6: Before renewing your health insurance plan each year, be sure to check out other plans during open enrollment. There may have been significant improvements in cost or coverage since you last applied, especially if you got your plan before January 1st, 2014.
- Rule 7: (the final rule): If you lose your job, dont automatically take COBRA, which is a high-priced way to extend your employer-sponsored health insurance for up to 18 months. Instead, shop around for other health insurance plans before making any decisions. Congratulations!
You have finished our health insurance basics curriculum! If you want to see our free recommendations for great health insurance plans or HSAs, or just check out more educational material, be sure to check out our website..
