Health insurance coverage varies greatly, but basically, it is a type of insurance policy that pays a pre-negotiated percentage of a policy holder’s covered medical treatments. Do you really need health insurance or can you live without it? The answer depends on whom you ask and the question is not always an easy one.
Like other forms of insurance, health insurance doesn’t really become an issue until you need it. Automobile insurance doesn’t do you any good until you get into a car accident. Life insurance doesn’t do you any good until you die. And health insurance doesn’t do you any good until you need medical assistance. If you believe in Murphy’s Law—that whatever can go wrong, will—then you probably should consider getting health insurance.
Today, health care costs are high and getting higher. Who will pay your bills if you have a serious accident or a major illness? You buy health insurance for the same reason you buy other kinds of insurance, to protect yourself financially. With health insurance, you protect yourself and your family in case you need medical care that could be very expensive. You can’t predict what your medical bills will be. In a good year, your costs may be low.
But if you become ill, your bills could be very high. If you have insurance, many of your costs are covered by a third-party payer, not by you. A third-party payer can be an insurance company or, in some cases, it can be your employer.
In some countries, health insurance is not offered by private companies like it is in the United States. In England, France, Canada, Sweden and Norway, for example, the doctors and hospitals are reimbursed by the government instead of an insurance company.
Types of Health Insurance
In the United States, there are three basic types of health insurance:
1) Self-Insured/Uninsured. This is where an individual has no insurance or has health insurance but is responsible for paying 100% of the insurance premium. This group is estimated to comprise at least 30% of the US population.
2) Managed Care Plans. Managed plans focus on preventative care and keeping medical costs low. With health care costs almost constantly on the rise, managed care health insurance is the trend. It offers moderate health care coverage for a relatively low price. The basic principle behind managed care networks is controlling costs by controlling care access.
These plans cover the cost of preventative care such as annual check-ups. Managed Care Plans fall into three categories. All are essentially networks to provide contracted services by specific providers at contracted prices:
i) Health Maintenance Organizations (HMO) are prepaid plans in which members pay a fixed monthly fee, regardless of how much medical care is needed in a given month. HMOs provide medical services ranging from office visits to hospitalization and surgery, and usually insist that you stay within the network when you need services from physicians and hospitals.
ii) Preferred Provider Organizations (PPO) are groups of doctors and hospitals that provide medical service only to specific groups. PPO members typically pay for services as they are provided, and the PPO sponsor typically reimburses the member for the cost of the treatment. In most cases, the price for each type of service is negotiated in advance by the healthcare providers and the PPO sponsor.
iii) Point of Service (POS) plans are not as common as the other two. This is a type of managed healthcare system in which you pay no deductible and usually only a minimal co-payment when you use a healthcare provider within your network. You also must choose a primary care physician who is responsible for all referrals within the POS network. If you choose to go outside of the network for healthcare, you will be subject to excess charges or deductibles.
3) Indemnity Plans. Indemnity plans enable participants to seek medical assistance whenever they need. Participants can visit any doctor or specialist, as often as they feel necessary. There are no restrictions when it comes to seeking medical help, but this is by far the most expensive type of health insurance plan.
Indemnity insurance focuses on the treatment of unexpected illnesses, and completely covers your health- no matter what happens. Insurance companies pay fees for the services provided to the insured people covered by the policy. You can go to the doctor of your choice, and you, your doctor or your hospital submits a claim to your insurance company for reimbursement.
Patients accept responsibility for keeping receipts and medical bills and for completing the claims procedure and filling out the paperwork. You will only be reimbursed for “covered” medical expenses In other terms, it offers flexibility in exchange for higher out-of-pocket expenses, more paperwork, and higher premiums
Benefits of Health Insurance
One thing that’s important to understand when researching health insurance benefits is that each policy includes its own set. It’s easy to make the mistake of assuming that features or health coverage exists when they don’t. However, these types of assumptions not only are wrong, but they could one day leave you facing insurmountable medical bills.
The ideal personal or family health plan would pay for every health issue that may arise pregnancy, blood transfusions, sick and well care, minor and major surgery, hospital stays, etc. But the truth is health insurance benefits typically are limited and they seldom will cover 100% of the costs, which is why it’s so important to read the policy’s fine print. You’ve got to know exactly what is and is not actually covered.
While health insurance benefits do vary from policy to policy, one thing that most health insurance companies are offering in their policies nowadays is something called preventative or ‘well’ care. Administrators realize that their overall medical costs can decrease significantly when those they cover seek routine medical treatment.
Staying healthy by getting annual check-ups and regular immunization oftentimes helps prevent illnesses from developing in the first place. And identifying potential health issues early on, before they become difficult and expensive to treat is saving insurers money and saving lives.
Generally, the types of health insurance benefits that most policies cover in full or partially include: annual physical examinations, emergency/urgent care, laboratory work including blood testing and x-rays, prenatal care, well-baby visits, an annual routine eye exam, and most care required while admitted into a hospital. Some plans even offer discounts on health club facilities and programs that help individuals stop smoking.
While health insurance benefits are sometimes difficult to determine, those responsible for putting policies together often do a great job delineating the types of medical treatments and services that are not covered. This is typically an alphabetical, detailed listing of everything that is not covered under a policy, from acupuncture to vision correction treatments such as Lasik and radial keratoplasty. When selecting a health plan, don’t forget to carefully review this section.
Dental care and vision/eye care beyond an annual eye examination are usually not included in health care plans in the USA. Coverage for these types of services is instead typically offered as separate plans with separate benefits, separate premiums and separate deductibles.
They’ll typically have different forms to use and different procedures to follow. Because of the soaring costs associated with prescription drugs, many insurers have eliminated this type of coverage from their health insurance benefits package. More and more, prescription drug plans are being offered separately in the same manner as dental and vision plans.
Finally, several states have developed unique state-mandated health insurance requirements for their residents. These are usually designed to be consumer-oriented to protect consumers from predatory practices. The requirements are not transferable from one state to another so when a person moves out of state, they lose them (or they gain them). That’s why it’s important to use your correct residential address to ensure that you receive the health insurance benefits you’re entitled to.
Which of these types of health insurance is right for you will depend on your personal situation. Choosing health insurance coverage is a time-consuming task and it can certainly be frustrating, but it’s something that everybody needs to consider sooner rather than later.