What Is Health Insurance?
One term that you often hear is health insurance, which is coverage of your medical expenses. It is common, and various companies provide health insurance plans. Still, many of us don’t know much about it. Here is everything that you should know about health insurance.
Health insurance is the coverage of your medical payments. That includes medicines, surgery, and other related things. As per what health insurance plan you decide, either you pay the cost out of your pocket, which is later reimbursed, or the insurance company pays the medical bills directly.
When you talk about health insurance, the term “provider” means a hospital, doctor, healthcare, pharmacy or laboratory. The term “insured” means the one who owns the health policy, i.e., you.
Is health insurance a right or a product to buy?
Health insurance is available in almost all countries of the world. In major countries like the USA, health insurance is also included in every employer benefits package. It is an additional thing, which an employer gives to its employees.
In many countries, health insurance is provided by the state, and it is considered as a citizen’s right to claim for it. Examples of such countries are the United Kingdom and Canada. Just like education, health is viewed as a part of public service.
In other countries, the idea of health insurance is different. It is a citizen’s responsibility to insure him for health. The only exception is some groups of citizen’s, i.e., older adults, disabled, veterans, etc.
This model of health insurance is followed in all other countries including the USA. Lately, President Obama of USA introduced laws, which makes it mandatory for everyone to get a health insurance. In case of a failure, there are specific penalties that get imposed on the citizen.
All of us need an assistance to cover our medical expenses at a particular stage of life. The medical treatment and attention are never free unless your country is a welfare state. To avoid a problem in payments of medical bills, it is a good idea to consider health insurance.
Types of health insurance plans
On a broader scale, there are two types of health insurance plans.
- Private health insurance
- Public health insurance
Private health insurance – Private health insurance is when you are required to get the insurance plan all by yourself. It is done through individual insurance companies and plans which are as per user’s affordability.
Public (government) health insurance – this type of insurance plans are offered by the state, and you don’t have to purchase or pay for it separately. For example, National Health Service (NHS) in the United Kingdom is not a health insurance company, but it makes sure to provide all its citizens free medical services.
An example of public health insurance in the USA is Medicare that is a national federal social insurance program for people that are over the age of 65 years or more. It also supports disabled people.
Health insurance plans in the USA
If you are living in the USA, there are five main types of health insurance plans that you should know. That includes;
- Managed care plans
- Indemnity plans
- Health maintenance organization (HMOs)
- Point-of-service plans (POS)
- Preferred provider organizations (PPOs)
**Or a combination of these plans
In 2003, the US government introduced an option that was a combination of health maintenance organization (HMOs)/ Point-of-service plans (POS)/ Indemnity plans with a savings account with tax benefits. They called it a Health Savings Account or HSA.
It is better to know the difference between these options so that one can decide which plan to follow.
Managed care plans
Managed care plans are an insurance plan that is a contract with the healthcare provider and the person at a special price. This special rate is low then the actual expenses.
The providers in this type of plan have specific rules that say how much would the plan pay. The restrictive plans usually cover a low cost, and the flexible plans are mostly expensive.
In this type of plans, the insured has an option to select a doctor of his choice. The doctor/hospital or the insured will claim for a reimbursement to the health insurance company in case of a medical situation.
You should know that the insured would only be reimbursed as per the benefits policy of insurance provider. If it is necessary to read and understand the benefits policy before signing it. Do not ignore even the minor details.
Sometimes indemnity plans do not play for the total medical expenses and pay a partial amount, i.e., 80%. The insured is liable to spend the rest, which is not covered by the insurance plan.
Health maintenance organizations (HMOs)
Health Maintenance Organizations provide services to the insured person directly. The person goes to an HMO’s linked medical provider to get the medical treatment.
He doesn’t have to pay for the service that he receives. A set amount is paid to the HMO before which makes the insured person able to avail these medical benefits.
For most of the cases, HMO only covers the specialist doctors and not general practitioners. But for that, one has to be referred by the primary care physician. As per various health insurance advisors, HMO is the most affordable plan of health insurance.
Preferred provider organization (PPOs)
Preferred provider organization or PPOs is a similar plan as that of indemnity plan. The insured has the liberty to get checked by a doctor of his or her own choice. The PPO plans works together with health care providers (clinics, hospitals, laboratory).
Point of service plans (POS)
The point of service plan is a mixture of HMO and a PPO plan. The insured can choose to get checked by a general physician and coordinate with the directions or he can directly get the specialist checkup.
When the insured required medical assistance, there are choices that he has and it depends on which type or POS plan he has taken. Some of the options are;
- Plan through a primary health care/physician
- Plan through PPO network provider
- Plan through non-PPO network provider
Health savings accounts (HSA)
Health savings account abbreviated as HAS is a tax-free savings account that covers your future medical bills. The patient who has a high-deductible plan and has no other insurance plan signed up is eligible to apply for it.
It is suitable for those, which are at a risk of some medical emergency. They may have or will have medical cost to pay, and selection of this account will suit their need.
People can also sign up for an HSA plan through their employer if the company where they work offers it. The HSA plan is paired with an existing health plan, which is different for an individual and a family. You can select any of it.
The health plan, which has high deductibles, is of reasonable premiums. To compensate for it of the pocket cost, the insured can also contribute to the payment with a certain amount to a tax-advantaged account. This amount and the tax benefits change every year so watch out if you are planning to consider it.
Best health insurance companies of USA
Following is a list of largest health insurance companies in the United States. You can check the individual website of each one of them and know more about what they offer for the insured person.
- Unitedhealth Group
- Aetna Group
- HCSC Group
- Kaiser Foundation Group
- Wellpoint Inc. Group
- Blue Shield of CA Group
- Cigna Health Group
- Highmark Group
- Coventry Corp. Group
- Humana Group