Healthcare costs are staggering, and all it takes is a single surprise medical event to land a person in bankruptcy. This is especially true for the healthcare system in the US, which operates on a “for-profit” model. Nobody can predict when they’ll get sick, and any unfortunate medical event can befall anyone. Unless you’re a millionaire and can afford to pay all of your medical bills upfront, you will need health insurance. Health insurance allows the insurance company to negotiate a more affordable price for medical care on your behalf. In exchange for a set amount paid each month, called the “premium”, the insurance company provides medical coverage to its consumers in times of need. Not all people who are part of the insurance plan are sick at all times, and the monthly premiums that are paid by consumers allow insurance companies to provide coverage to a relatively small number of sick consumers.
Healthcare insurance plans can be complicated and tricky to understand but here are some of the absolute essentials you need to keep in mind.
Know Types of Insurance Plans
Not all healthcare insurance plans are the same. You might have come across the terms HMO, EPO, PPO, and POS and would have wondered what all these types mean. HMO, an abbreviation for Health Maintenance Organization, is a type of insurance plan that only provides coverage for a specified network of healthcare providers with your medical care coordinated by a primary care physician. All the referrals will be handled by your primary care doctor. EPO or Exclusive Provided Organization is similar to HMO but has a larger network of hospitals. In case you want to go to an out-of-network hospital, your medical costs will not be covered by your insurance company.
A POS or Point of Service plan, on the other hand, allows out-of-network coverage and like HMO, require a referral from your primary care doctor. The costs for out-of-network care will be higher than in-network care, but you are assured that you will be provided with coverage. PPO or Prefered Provider Organization offers the most flexibility as it allows both in-network and out-of-network coverage. You also don’t need a referral from your primary care physician. However, it comes at higher monthly premiums, so you need to keep your budget in consideration when you’re choosing an insurance plan.
Not All Insurance Plans Are Equal
Insurance plans differ on the types of coverage they provide. Some insurance plans only cover essential medical coverage and don’t provide dental coverage or even maternity coverage. However, after the Affordable Care Act, insurance plans are expected to meet certain essential coverage requirements. Despite that, your insurance plan might not provide coverage of certain prescription drugs. Medicare, which is a government-subsidized insurance plan for people below a certain threshold of income, for instance, doesn’t provide coverage for all drugs. For people looking for additional coverage, they can opt for the best Medicare Part D plans that can help them meet the costs of prescription drugs. While most people would want their insurance plans to provide maximum coverage, there are certain individuals who might opt for “catastrophe health insurance plans”. These only provide coverage in worst-case scenarios and you need to pay for your regular medical visits.
How To Get An Insurance Plan
After reading about all the types of insurance plans, you might be wondering how you can actually get healthcare insurance. If you’re already employed, then things are simple for you because most employers provide healthcare insurance. While employer-provided insurance might not be the best, you at least receive some medical coverage. However, you also have an option to choose your own healthcare insurance either directly through an insurance company or you can search through the government’s health insurance site. All you need to do is register yourself, and you might even find yourself eligible for a federal subsidy if your income is below a certain threshold. Keep in mind though, you can only register yourself during what is known as an “open enrollment period”. If you miss this window, you can only apply within 60 days of a “qualifying life event” which could be anything from a change of job or some other major life event.
Healthcare insurance plans are intimidating to understand, but hopefully, with the right information, you can choose the best plan for your needs. If you’re in good health, you might be tempted to not bother with healthcare insurance. However if the Coronavirus pandemic has taught us anything, it’s that healthcare is a necessity and we can never predict when we might need it. So don’t underestimate the benefits of a good healthcare insurance plan and get yourself enrolled.
