Health insurance protects you from devastating financial losses associated with expensive illnesses and injuries. When choosing a plan, be sure to review the summary of benefits and provider directory to understand costs and coverages.
Also, be sure to consider deductibles and copays when comparing plans. These can vary widely not only by insurer but by policy.
What is health insurance?
Like car insurance, health insurance helps pay for doctors, hospitals and medications in case you get sick or injured. It also helps prevent major illnesses by providing routine services, such as annual screenings and wellness visits. Health insurance can be obtained through your employer, purchased individually through a private insurance company, or offered by the government through the health insurance marketplace (also known as the exchange).
The term “health insurance” refers to a contract between an insurer and a policyholder where the insured pays a monthly premium in return for the insurer paying some or all of their covered medical expenses. The scope of coverage is specified in the policy, which includes a list of benefits. The policies must meet certain requirements, including that the premiums cannot be based on age, sex or state of health and that the insurer can’t deny coverage for pre-existing conditions.
A health insurance plan’s deductible is the amount you have to pay toward your medical bills each year before your health insurance begins paying. This is often a significant sum and can be overwhelming for some families. Once you’ve met your deductible, the health insurance company will begin paying a percentage of the remaining cost. The percentage you pay is usually based on a discounted rate that the insurer negotiates with providers.
There are some plans that require you to see doctors within a specific network in order to receive the best financial benefits. These are called managed care plans. Examples include HMOs and PPOs. These plans usually require you to choose a primary care physician who will provide referrals for specialists. In some cases, you can go out-of-network but it will require a higher cost sharing (coinsurance or copayments) on your part.
Many people have questions about what their specific health insurance covers and what it doesn’t. That’s why most health insurance companies offer a member service team that can answer your questions. You can find your personalized contact options online or call the number on your member ID card. You can also watch our series of videos to learn more about health insurance concepts, such as premiums, deductibles and provider networks.
What are the benefits of health insurance?
The most obvious benefit of health insurance is that it protects you from financial stress caused by unexpected medical bills. In addition to covering medical expenses, many policies also provide preventive care and cover preexisting conditions. This helps individuals maintain a healthy lifestyle and may even reduce their risk of developing chronic illness, which can be costly.
While the benefits of health insurance are clear, understanding a plan’s details can be complicated. A key factor to consider is the deductible, which is the amount you have to pay out-of-pocket each year before the insurance company begins paying. It is recommended that you select a policy with a low deductible. In addition, it is important to understand the exclusions (services or treatments that are not covered) in your policy. You can find this information in your policy document or by contacting your insurance provider.
Another major benefit of health insurance is that it can save you time and effort by simplifying your finances. Most health insurance plans will automatically keep track of your treatment and medical records, which can reduce the time you spend filling out paperwork at each doctor’s visit. Moreover, most health insurance companies require that their members receive a summary of coverage written in simple language at the beginning of each year. You can obtain this document by logging on to your health insurance provider’s website or calling the number on the back of your insurance card.
Health insurance is a necessary investment for any individual, especially those with children. Without it, the cost of medical emergencies and other unexpected expenses can be financially devastating. In fact, the cost of not having health insurance is often greater than the cost of a comprehensive plan.
While there are several options for purchasing health insurance, including employer-sponsored and individual policies, the most affordable option is to buy a group policy through an employer. You can also shop the health insurance marketplace to compare costs and benefits of different policies. While purchasing an individual or family health insurance plan, be sure to take into account the deductible, coinsurance and maximum out-of-pocket costs, as well as the available service providers and hospitals.
How do I get health insurance?
You can purchase health insurance through an individual plan, a private exchange (like the Marketplace), your employer or an association. You can also buy it from a broker or agent. It’s important to know your options and apply during open enrollment, which begins Nov. 1 each year. If you miss the window, you’ll have to wait until the next year to enroll unless you have a qualifying life event like moving, getting married or having a baby.
Buying individual or family coverage is a big financial commitment. It’s important to understand your policy before you make a purchase so you’re not surprised by costs. Your policy is an agreement between you and your insurer that lists a package of medical benefits, including tests, drugs and treatment services. It also specifies which services you are responsible for paying for, or “out-of-pocket,” such as copayments, deductibles and coinsurance.
When shopping for a plan, it’s important to consider which hospitals, doctors and pharmacies are in the network. This helps keep your costs down and ensures that your health care provider is working with your insurer. You can find this information on your plan’s website or by calling the toll-free number on your insurance card.
There are three types of health plans: health maintenance organizations (HMOs), preferred provider organizations (PPOs) and exclusive provider organizations (EPOs). HMOs are prepaid plans that have a specific group of doctors and hospitals they work with. PPOs have a wider network of providers but you may have to pay more for seeing an out-of-network doctor. EPOs are fee-for-service plans that usually have the lowest costs but may require a referral to see a specialist.
In addition to regulating the health insurance marketplace, your state’s insurance department and federal Department of Health and Human Services oversee regulations for Medicare and fully-insured group health insurance. It’s also important to be aware that some products, such as direct primary care and health care-sharing ministries, aren’t health insurance and don’t have to follow federal or state insurance rules.
How do I pay for health insurance?
The most common way to pay for health insurance is with a monthly premium. This is a fixed amount that you pay to your health insurance company to keep your coverage active. If you get your health insurance through work, your employer typically pays some or all of the premium.
You can also purchase individual health insurance directly from a private health insurance company, or through a state or federal health exchange. The price of individual health insurance can vary widely, depending on the benefits you want and the insurer you select.
Another factor that affects the cost of your health insurance is how much you spend out-of-pocket for medical care. Most health plans include a deductible, which is the amount you have to pay each year before your health plan starts paying for covered services. You may also have coinsurance, which is a percentage you pay for some services after the deductible is met. Some health plans also have a maximum out-of-pocket spending limit per year.
Having clear understanding of your costs can help you make smart choices about the kind of health care you need. The best way to do this is by reading your health insurance policy, which lists all the covered benefits and rules for how to use them.
You should also familiarize yourself with your health plan’s network. This is the list of doctors, hospitals and other providers your health insurance company has negotiated lower rates with to save you money. You can usually find a list of your plan’s network providers on the health insurance company’s website or by calling them. If you see a doctor outside your network, be sure to ask them about the cost of services before you receive them.
Non-preventive doctor visits and lab tests are often cheaper if you go to in-network providers. Some health plans require you to use in-network hospitals in emergency situations, and they may not cover out-of-network care at all. Your health insurance may also provide no-cost preventive services like annual checkups and vaccinations, which can help you stay healthy and avoid more costly medical problems in the future.
