Although it’s not a legal requirement, having health insurance is necessary for everyone, regardless of age or the state of their health. Even if you’re fit and healthy and seldom get sick, it is always a great idea to be prepared for accidents or unexpected illnesses is always a great idea.
Healthcare in most regions is not free. While the Affordable Care Act has made it easier for everyone to access medical care, you may still have to pay for it. As a result, visiting a doctor or hospital and buying the necessary medication can be very pricey, and if you’re not covered, it can be a massive financial burden.
Health Insurance Terms
If you’ve not had health insurance before, the first step is to familiarize yourself with the terms insurance companies, and health care providers use. It will help you understand the various plans and who is responsible for what payments. Some of the most common terms that you will come across include:
Premium
A premium is an amount you pay every month for your health insurance. If you are on your employer’s plan, the company will pay for a percentage of your premium.
Out-of-Pocket Expense
Any money that you have to spend is called an out-of-pocket expense. It can be a copay, deductible, or coinsurance. It can also be medical costs that your health insurance does not cover.
Flexible Spending Account (FSA)
If your employer sponsors your health insurance plan, you are likely to have an FSA. It’s a tax-advantaged account where you and your employer can contribute.
Funds from this account can be used to pay for any out-of-pocket medical bills. Each plan has different conditions regarding the funds in the FSA. On some policies, the funds will expire unless you’ve used them within a year. Some give up to two and a half months of the following year to use them, while others allow you to roll over a specific amount.
Health Savings Account
You can open a Health Saving Account (HSA) whether your health insurance is company-sponsored or purchased independently. The HSA is a tax-advantaged account that lets you save money to pay for medical expenses that your health insurance doesn’t pay for, like dental care.
You are not taxed on the funds you withdraw from this account and can roll over whatever money you don’t use.
Copay
Some health care plans have a copay. It means you must pay a fixed amount every time you fill a prescription or visit a healthcare worker. The copay amount differs by plan, but whatever the fixed amount is, your insurance will cover the bill’s balance, whatever the specified amount is.
Deductible
Many policies require you to pay a deductible before the insurance company pays your medical bills. Each plan has a different deductible amount, which you will have to pay – for medical care and medication – annually before the insurance company pays.
Even after you’ve reached the deductible amount, you will still have to pay for any copays or coinsurance stipulated in your plan.
Some plans may cover preventive care and vaccines before you’ve paid the deductible.
Coinsurance
Coinsurance is a condition found in some insurance plans, and it’s the amount you must pay after reaching your annual deductible. It’s typically worked out as a percentage.
For example, if your coinsurance is 20% and you’ve already paid your annual deductible amount, going forward, your insurance will pay for 80% of each bill and mediation, and you will be responsible for 20%.
Types of Health Insurance
Health insurance can be divided into two major types – public and private. Public health insurance is not free but is subsidized by the state to make it more affordable for people who can’t afford private health insurance.
Both public and private health insurance can be further broken down into different types.
Public health insurance is divided into three types catering to three ages groups:
1. CHIP
The Children’s Health Insurance Program was designed to provide medical care to children under eighteen who come from low-income households.
2. Medicaid
Medicaid is targeted at adults who are low-income earners. This insurance plan often pays for medical and long-term care.
3. Medicare
Adults over sixty-five from poor communities may qualify for medicare. There are different plans available based on a patient’s individual medical needs.
Many insurance companies offer private health insurance. While this health insurance is more expensive, it’s more comprehensive, and you can customize a policy to suit your needs. Since you will be paying more, shopping around is essential to look for the best health insurance company and policy for you.
All other types of health insurance are considered private. While insurance firms each offer a range of policies that you can compare online, private health insurance can be broken down into four primary types: HMO, PPO, EPO, and POS. Each of these plans has different conditions and requirements that you need to meet.
Health Maintenance Organization (HMO)
The Health Maintenance Organization is quite limited. Under the HMO plan, your insurance only pays for specific doctors and hospitals. You will also have to get a referral from your primary care provider if you need to see a specialist. However, since it’s typically a more affordable private insurance plan, it is common among people on a tight budget.
Preferred Provider Organization (PPO)
You don’t have to use specific hospitals or doctors if you’re on the Preferred Provider Organization plan. Still, you qualify for lower rates if you use a healthcare provider in your network.
Exclusive Provider Organization (EPO)
The Exclusive Provider Organization is one of the most popular plans that companies sponsor. Under the EPO, you may visit any healthcare provider within the network.
You can also see specialists without needing to be referred. However, if you choose a healthcare provider or hospital out of the network, the insurance won’t pay.
Point of Service (POS)
While you may visit healthcare providers in and out of the network under the Point of Service plan, you will qualify for a reduced rate if you go to a healthcare provider within the network. If you need to visit a specialist, you must be referred by your primary care provider.
Article Submitted By Community Writer
