The simplest definition of health insurance would be that it represents a type of insurance that helps protect you from high medical care costs. Most people in the United States get a health insurance policy through their employers, who usually pay for it. People are offered health plans that they must agree to. These plans are nothing more that simple contracts with health care providers and medical facilities to provide care for members at reduced costs. Besides this type of contract, you can also purchase health insurance on your own, which is usually much more expensive then employer-based insurance. Those without health insurance must pay medical bills directly, which is the most expensive solution.
Factors affecting insurance price
There are several different health insurance packages, and they all come with different prices attached. What are the factors that affect insurance price?
For one, there’s the factor of prolonged life in modern countries. Because of advances in medical technology, people in developed countries live longer, so there is a larger group of older people requiring more medical care than a young healthier population. This is one of the main factors which cause an increase in the price of health insurance.
There are also several other factors such as:
- Insufficient exercise
- Excessive alcohol use
- Street drugs
- Unhealthy food choices
- Shortage of doctors in impoverished or rural areas
- Modern sedentary lifestyle
Insurance price could be lowered easily – if people were doing exactly the opposite of what is outlined above. The benefits would be doubled – a healthy lifestyle would protect us from diseases, and all insurance companies would have to lower their bills!
Health insurance coverage basics
We’ve already mentioned that insurance is offered through managed care plans, signed by certain doctors and hospitals. The health providers and you form a plan network, and agree to honor your side of the bargain. That’s why the insurance company will only pay bills to the providers who are members of the network. They will not pay for you to go to a provider who is not in their network. Your doctor, who is a member of your network, may easily send you to someone outside the plan's network! Of course, you will be expected to cover all the expenses. That’s why before you go anywhere, you must ask the insurance company if it will approve the use of the out-of-network hospital.
Covered services and medical necessity
When you sign a health insurance policy, you get the lists of medical benefits such as tests, drugs, and treatment services you will get for free, or which your insurance company will partially pay for. These services are referred to as "covered services."
Of course you must be careful because it is easy to use something that isn't on the list, such as similar but deferent medications, in which case you will have to foot the bill yourself.
The term “medical necessity” covers anything that your doctor considers to be necessary; medical benefit, on the other hand, is something that your insurance plan has agreed to provide. Don’t confuse the two, and keep in mind that sometimes necessities aren’t covered by your medical insurance,
Tips for getting the best out of your health insurance
1. Insurance costs a lot, but having none costs a lot more
We will describe ways to save money on insurance, but skipping coverage isn't one of them. Medical bills without insurance can cause bankruptcy over night.
2. Only you are important in this process
There are many different types of health benefit plans, but you must choose one which offers you the best deal. Check out the plans available, ask all the questions that come to mind, and only then choose what’s best for you.
3. Learn about the possible benefits
Remember – cheapest isn't always the best. Ask about cover preventive care, baby care, vision or dental care. Think about your family, too.
4. Quality is better than quantity
Not every health insurance company offers services of equal quality. Not all health plans, doctors, hospitals, and other providers give the highest quality care. Try asking about examples to compare quality of service. Internet search is always an option.
5. Update your Benefit Coverage after every possible change
Every family change, such as marriage, divorce, childbirth, adoption, or the death of a spouse is a sign for you to change your health benefits. You and your family may be eligible for a special enrollment period under provisions of the Health Insurance Portability and Accountability Act (HIPAA). You don’t want to miss out on this, it can save you a lot of money!
6. Life Events Can Affect Your Health Benefits
Under a legal act known as Consolidated Omnibus Budget Reconciliation Act (COBRA), you and your family can purchase extended health coverage under your employer's plan in situations such as: losing your job, changing employers, getting a divorce, etc. This coverage doesn’t last long! In most cases it ranges from 18 to 36 months, depending on your situation. That’s why you have to be aware of these conditions, and make sure you are following the plan of your health providers. You might want to get a copy of COBRA and study it.
7. HIPAA Can Also Help If You Change Jobs
HIPAA generally limits pre-existing condition exclusions to a maximum of 12 months (18 months for late enrollees). It also requires this maximum period to be reduced by the length of time you had prior creditable coverage. You should receive a certificate documenting your prior creditable coverage from your old plan when coverage ends.
8. What to do in case of retirement?
Make sure there is no conflicting information about the benefits you will receive in retirement. Sometimes there’s nothing to be done, and you lose your retirement health insurance. In this case, consider private insurance options.
9. Tax breaks can help
Ordinarily, medical expenses are not tax deductible until they exceed 7.5 percent of your income. However, if you're self-employed, you can get a tax break without meeting this threshold.
Remember that the lowest premium isn't always the cheapest plan. What your insurance covers is much more important than how much you pay up front. On the other hand, remember that even a good coverage can have loopholes; be well-informed about possible benefits, policies for doctor visits, benefits for mental health, prescription drugs, dental care, etc.