Health insurance isn’t something you typically think about until facing illness or accidents. Let’s be honest, no one likes to think about getting sick or injured. But the truth is, this preparation is never too redundant. In fact, more and more people are paying the attention that health insurance deserves.
If you fall into the category of people who do not want to wait until the last minute, there is good news. This article here aims to provide a basic explanation regarding health insurance and ways in which it could benefit you.
What is Health Insurance exactly?
Health insurance covers the costs of medical care and surgery for the insured person. The term “insurer” refers to providers of health insurance, such as hospitals, clinics, doctors, laboratories, health care practitioners, and so on. Meanwhile, the “insured” is the person who owns the health insurance policy or is legally responsible for it.
Health-care costs can be prohibitively expensive for many people. Fortunately, health insurance policyholders have a number of payment options. Depending on your plan’s coverage, one can be paid directly by the health care insurer, or the insured can pay for their health care services and then receive reimbursement.
The amount paid out of pocket by the insured varies depending on their deductible, co-pay, and coinsurance. Health-care costs can also vary depending on the type of care received. Preventative care, for example, may be covered at a lower rate than more complex procedures. Finally, the cost of health care is determined by a variety of factors, and patients must understand their coverage in order to make informed decisions about their care.
Health insurance is commonly included in employer benefit packages in countries without universal healthcare coverage, such as the United States. According to the Kaiser Family Foundation, the number of people without health insurance fell by more than 20 million after the Affordable Care Act was implemented in 2010, reaching its lowest level ever in 2016. (KFF).
However, the number of adults without insurance increased by 2.2 million between 2016 and 2019, rising from 26.7 million in 2016 to 28.9 million in 2019. Between 2016 and 2019, the percentage of people without health insurance increased from 10% to 10.9 percent. However, the proportion of people with health insurance remains higher than it was prior to the implementation of the Affordable Care Act.
According to a Commonwealth Fund report from 2012, one-quarter of all U.S. citizens of working age have a gap in health insurance coverage. Many respondents in the survey lost their health insurance when they were laid off or changed jobs. According to the KFF, Black people and those with low incomes are more likely than other groups to lack health insurance. The quality of care received in emergency departments varies greatly depending on the type of health insurance a person has.
Different types of Health Insurance
There are two main types of health insurance: private and public, or government.
Companies provide private health insurance, whereas the government provides public health insurance. There are a few more specialized types of health insurance. Each of these will be examined in greater depth in the sections that follow. Private health insurance is typically more expensive than public health insurance, but it may provide more comprehensive coverage. Public health insurance is typically less expensive, but it may come with additional restrictions.
Employer-sponsored insurance, which is provided by an employer, is the most common type of private health insurance. Individual plans are another type of private health insurance available directly from an insurance company. Medicare, Medicaid, and the Children’s Health Insurance Program are examples of public health insurance.
According to the Centers for Disease Control and Prevention (CDC), the United States’ healthcare system is heavily reliant on private health insurance. According to the National Health Interview Survey, 63.7 percent of people under the age of 65 in the United States have some form of private health insurance coverage.
In exchange for a premium, the state subsidizes healthcare under this type of insurance. In the United States, public health insurance includes Medicare, Medicaid, the Veterans Health Administration, and the Indian Health Service.
Aside from the two main health-care plans that most citizens are familiar with and purchase, there are a few other ways for people to determine which category the insurer belongs to. The administration process of health insurers, as well as how they connect with health care service providers, will be crucial. Here are a few examples of other types of health insurance plans that are currently available and should be considered:
Managed care plans
The insurer will have contracts with a network of providers to provide lower-cost medical care to its policyholders under this type of plan. Out-of-network hospitals and clinics will face penalties and additional costs, but they will still provide some treatment. The more expensive the policy, the more adaptable it is with the hospital network.
Indemnity, or Fee-for-Service, plans
A Fee-for-Service plan pays for treatment equally among all providers, allowing the insured to choose their preferred location of care. On an indemnity plan, the insurer will typically pay 80 percent of the costs, with the individual paying the remaining costs as coinsurance.
Health Maintenance Organization plans
These are organizations that provide direct medical care to the insured. A dedicated primary care physician will usually be assigned to the policy to coordinate all necessary care. Health Maintenance Organization (HMO) plans typically only cover treatment referred by a primary care physician and have negotiated fees for each medical service to reduce costs. This is typically the least expensive type of plan.
Preferred Provider Organization plans
A Preferred Provider Organization (PPO) plan, like an indemnity plan, allows the insured to see any doctor they want. The PPO plan also includes a network of approved providers with whom it has negotiated discounted rates.
The insurer will pay less for out-of-network providers’ services. People with a PPO plan, on the other hand, can self-refer to specialists without visiting a primary care physician.
A Point-of-Service plan combines the benefits of an HMO and a PPO plan. The insured has the option of having all treatment coordinated through a primary care physician, receiving treatment within the insurer’s provider network, or using non-network providers. The treatment progress will be determined by the type of plan they have.
The importance of learning health insurance categories
The type of plan a person has determines how they will approach receiving the treatment they require, as well as how much money they will need to pay on the day they receive it.
The Health Savings Account was introduced by the United States Congress in 2003. (HSA). It combines an HMO plan, a PPO plan, an indemnity plan, and a tax-advantaged savings account. In plan year 2020, however, a policyholder must combine this type with an existing health plan with a deductible of more than $1,400 for individuals or $2,800 for families.
HSAs can supplement coverage, allowing existing plans to cover a broader range of treatments. If an employer contributes to an HSA on behalf of their employees, the contributions are tax-free. Individuals can save money in their HSA while they are healthy and use it to cover medical expenses later in life.
People with chronic conditions, such as diabetes, may be unable to save a significant amount in their HSA because they are frequently required to pay high medical costs for the management of their health concern.
These plans frequently have very high deductibles, which means that, while premiums may be lower, people frequently end up paying the full cost of any required medical treatment.
As plan types evolve, there is more overlap. The distinctions between policy types are becoming increasingly hazy. To control costs and ensure adequate resources to pay for appropriate care, the majority of indemnity plans employ managed care techniques. Similarly, many managed care plans have incorporated elements of fee-for-service plans.
As part of the Affordable Care Act, having some level of insurance is legally required in the United States. A person who does not have health insurance must pay a fine.
However, policymakers removed the Individual Mandate from the Affordable Care Act in 2019. In the United States, insurance is no longer a legal requirement for individuals. If the policy also covers the family’s children, a person may remain on their parents’ insurance until the age of 26, even if they are:
- living away from home
- not financially dependent on their parents
- eligible to be included on their employer’s coverage
Insurance is regulated at the state level, so purchasing a policy in one state differs from doing so in another.
Although state legislation can influence the cost of a policy, the insurer makes the most important decisions about a person’s coverage and reimbursements. People should consult with their broker or customer service representative about the impact of any new legislation on their specific policy.
Health insurance helps covers the cost of an insured individual’s medical and surgical expenses. There are various plan types, and they vary in terms of what they cover and how a person can access treatment. Currently, a person in the U.S. must have some form of health insurance coverage. Anyone without a form of coverage may need to pay a fine.