Health insurance can be dizzyingly complex for beginners on this topic.
But, once you learn the basic terminology and pricing structures, health coverage will seem far less daunting. On that note, we will cut through the complexity and explain everything you need to know in this guide to health insurance.
Okay, so first things first, let’s write down the most basic concept of health insurance. In return for a monthly fee, which is called a premium, health insurance reduces the cost associated with the risk, in this case, expensive medical bills due to sickness or injury.
Unlike other forms of insurance, health insurance premiums are unique. They are only based on a few factors - your age, location, and smoking habits, but not on your health status! What this means is that if you have a pre-existing health condition, like, for instance, asthma or diabetes, your insurance can’t raise your premium rates or deny you coverage. While this is undeniably great for the consumer, health insurance also has a few problems.
The main problem that the beginners, just starting to look into the health insurance face is the confusing jungle of terms. Deductible? Coinsurance? What does it all mean? But don’t worry, if explained properly, health insurance isn’t all that complicated. Let’s go through an example to start unpacking these terms. Let's say a person has a 200$ monthly premium with a 1000$ deductible, 20% coinsurance, and a 5000$ out-of-pocket maximum. Okay, so this person was, for instance, playing football, broke a leg, and now is stuck with a 100 000$ medical bill. So, how much does she have to pay?
Let’s start with the deductible first. The deductible is simply how much do you have to pay each year for insurance to start paying its share. So in this case, before the insurance company helps with the bill, the person has to pay the first 1000$ herself.
After the deductible is settled, the remaining 99 000$ is split between this person and the insurer, based on the person’s coinsurance, which is the percentage that the person must meet, which in the presented case is 20%. So, basically, for every 4000$ that insurance pays, the person pays 1000$.
This is when the out-of-pocket maximum comes into play. So, this term represents the maximum sum that a person has to pay each year before their insurer starts paying the rest. In this case, the person has already paid her 1000$ deductible, as well as her 4000$ coinsurance, so the out-of-pocket maximum is reached, and now, the insurance company is going to pay the rest.
Okay, so we have explained how this works with the emergencies, but what about the routine checkups? Well..no. These are usually paid with something called the copay. This is simply a flat fee associated with the specific routine event, like a prescription drug, or a 25$ doctor visit. So, you can pay this upfront, or after when you get the bill, but you will get compensated for the money spent.
HMO? POS? PPO? Gold or silver? Don’t worry, we are going to explain these as well.
Group Health Insurance
Group health insurance plans are provided by an organization to a group of employees, which is managed either by the management or by the group of employees itself. This can indeed be useful since it is far less costly. The people at GroupEnroll.ca believe that one of the great advantages of group healthcare is that if someone has a chronic illness or a pre-existing condition, they can gain partial reimbursement after purchasing the insurance plan. And not only that, but group insurance terms also guarantee that either spouse or other dependents of the employee can benefit from it, so, all the necessary treatment for the patient can be claimed later on.
Most of the health insurance plans including those given by group health insurance for small business provider are associated with a certain metal, bronze, silver, gold, and platinum, which are associated with the average percentage that your insurer will pay per year. Bronze is the lowest, and platinum is the highest. There is also one below the bronze plan, the catastrophic plan, that covers the very least and hence is pretty risky, but oftentimes the only plan available for the poor and homeless.
Okay, so HMO and EPO are by far the strictest since they only cover the designated hospital network. Also, all the healthcare covered by the HMO must be coordinated with the primary care physician. On the other hand, these two generally cost the lowest amount of money. With PPO plans, you can visit any hospital without the primary physician coordination, but out of network healthcare is pricier, even though the whole plan is more costly than the HMO and EPO. POS is the mix of the previously mentioned plans, offering out of network healthcare, but you do need to go through a primary physician.
Healthcare in America will never be simple, but it's more approachable when you understand how the system works. The right insurance plan will keep you healthy, financially secure, and protect you from surprise medical bills.