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Health Insurance

Health insurance is arguably the most important insurance for individuals who live in places where there is no socialized healthcare. Knowing that you do not have to go into debt to visit the hospital will lead to better choices for your health.

People who do not have to worry about paying out of pocket for hospital costs are more likely to visit the hospital on a frequent basis and stand a better chance of having conditions discovered early on. However, suppose an individual has to worry about how they are going to afford a hospital visit. In that case, they might avoid visiting the hospital, putting them at greater risk of developing severe health issues owing to delayed care. This is where health insurance comes in.

With health insurance, individuals do not have to worry about the cost of hospital visits or treatments when they are ill. Health insurance will cover medical, surgical, prescription drug costs, and dental expenses in some cases.

Policyholders pay premiums in advance, and the insurer handles all or part of health costs that are specified in the policy. Depending on the policy, the insurer may have to pay partial or complete costs for any medical procedures and treatments required by health practitioners. Furthermore, policyholders may be entitled to reimbursements from the policy. In this case, the insured may pay for the cost of treatment out-of-pocket and be reimbursed by the insurer at a later date.

Types Of Health Insurance

Health insurance coverage largely depends on the insurer. Each insurer can provide plans that cater to a particular group of people, thereby making the policy simpler to understand. Health insurance providers can be public or private, and this affects the subset of the population for which they are tailored. The premiums for both types of insurance plans differ significantly, and so do their coverage.

Public Health Insurance

The government provides public health insurance plans for individuals who cannot afford health insurance plans independently. The most common examples of these are Medicare and Medicaid. These plans provide coverage for older, disabled, and low-income citizens, and hospitals, or providers, get reimbursed the cost of treatment by the government after the fact. 

Other common examples include the Veterans Health Administration, which provides medical services to army veterans, CHIP (Children's Health Insurance Program), and the Indian Health Service.

Private Health Insurance

Private health insurance is rampant in the U.S. due to the lack of socialized healthcare. There are an estimated 900 companies offering health insurance in the U.S., with about 63.7% of the population covered under private health insurance.

Private companies provide these insurance policies to individuals for a premium. The premiums are considerably higher compared to public health insurance, and coverage can differ from one policy to another.

Common Health Insurance Plans

Depending on the needs of the individual, the ideal insurance plan can differ from person to person. It is essential to know each type of insurance plan's terms to pick the one most suitable for your needs. The choice of health plans comes down to the applicant. Nevertheless, the health plan will fall under one of these categories.

Indemnity Plans (Fee-For-Service)

An indemnity health plan allows the policyholder to be in charge of their healthcare. With this place, the policyholder can decide which doctor and what hospital they go to. Treatment is covered equally across all medical providers. However, the insurer does not pay all of the cost of treatment in this plan.

The insurer covers 80% of treatment costs in an indemnity plan, and the policyholder will have to pay out-of-pocket for the rest of the cost. The flexibility of picking their own provider is the main appeal of this insurance plan to policyholders.

Health Savings Account (HSA) Plans

An HSA health plan allows policyholders to keep an untaxed portion of their income for medical costs. Individuals can then use these pre-tax dollars to pay for copays, coinsurance, deductibles, and whatever expenses may arise. 

HSA plans carry many advantages with their use, making them one of the most preferred health plans. With an HSA plan, policyholders can;

  • Pay for medical costs with untaxed dollars
  • Save for retirement using an HSA
  • Save on taxes
  • Control where and what their dollars do

The drawdowns of having an HSA plan is that individuals must have a high deductible health plan (HDHP) to be eligible for the policy. Also, the HDHP should have a minimum deductible of $1,350 for single coverage or $2,700 for family coverage to be eligible for an HSA.

High Deductible Health Plans are, simply put, plans that carry high deductible minimums before health insurance are applied. Insurance premiums for HDHP are lower than traditional health plans because the policyholder pays higher out-of-pocket costs than they would in a conventional health plan.

Health Maintenance Organization (HMO) Plans

HMO health plans are a type of managed healthcare plan. Unlike an HSA, the provider network for HMO plans is widely restricted, significantly lowering the choices of the policyholder. An HMO plan usually consists of particular health practitioners who can provide treatment to the policyholder. 

Premiums for HMOs are typically the cheapest because the insurer negotiates lower costs for treatment with providers in exchange for sending their policyholders to them. HMO plans only provide coverage for approved providers in the network. Further treatment outside of the approved provider is only covered when referred by the primary care physician.

Preferred Provider Organization (PPO) Plans 

A preferred provider organization plan works similarly to an indemnity plan because it allows policyholders to choose their own hospitals or medical providers. However, like an HMO plan, a PPO consists of a network of hospitals and providers, which a policyholder can choose from. A policyholder may also decide to seek treatment outside of the insurer's provider network for an additional cost.

A major upside of PPO plans is that policyholders can decide to visit a provider outside the network for specialist care without having to first consult with their primary care physician and still be covered under the policy. Insurers only pay a lesser amount when policyholders seek treatment from physicians outside the network.

Point-of-Service (POS) Plans

A POS plan is a mashup of an HMO and a PPO plan. A POS plan offers policyholders lesser costs when they choose practitioners within the network, thereby incentivizing them to stay within the insurer's network, but does not limit the policyholder to this network.

With a point-of-service plan, the insured can also decide to receive treatment within and outside the insurer's network.

Finding Health Insurance

Finding the perfect health insurance plan can sometimes mean a bit of shopping around, but this will pay off in the long run. First, it is important to know exactly what your needs are and what you need covered. Individuals with preexisting health conditions can often face higher premiums when they apply for insurance. However, healthy, young individuals qualify for low premiums.

The budget needs to be taken into account too. The applicant has to make sure that they can afford the monthly premiums on the policy before signing a contract with the insurer. 

Individuals who cannot afford private health insurance qualify for public or government health insurance and can get coverage under any of its plans. Employers can also offer health insurance as part of incentive packages for employees. 

Benefits Of Health Insurance

Health insurance carries both tax and savings benefits for policyholders. Insureds do not have to worry about treatment expenses when they are ill. They can rest easy knowing that they are not incurring debt while in the hospital or paying for medications.

Health insurance premiums are tax-deductible for the policyholder, and any benefits received are tax-free. The only exception for these are employees of S corporations.

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