Note: Parts of the Affordable Care Act (“Obamacare”) are being changed or removed through government legislation and policy. Some of the rules and regulations that affect the health insurance market are likely to continue to change over time. To stay up to date on obamacare and other health insurance topics, visit healthcare.gov and your state health commissioner’s office website.
premiums, copays, deductibles, in-network and out-of-network: welcome to the world of health insurance. and thought the advanced calculation was confusing.
what exactly is health insurance?
Health insurance is a plan that people buy in exchange for coverage of all types of medical care. most plans cover doctor appointments, emergency room visits, hospital stays, and medications.
The idea behind insurance is simple: medical care can be expensive. most people can’t afford it all out of pocket. But if you get a group of people together, and each one pays a fixed amount each month (whether you need medical attention at the time or not), the risk is shared among the whole group. each person is protected from high health care costs because many share the burden.
Do I really need it?
You’re young, you spend more time in the gym than an Olympian, you rarely catch anything worse than a cold, and your great-grandparents are still 99 years old. Why bother spending money on insurance? Aren’t the chances very good that you’ll never get seriously ill?
we hope so. But every day, thousands of perfectly healthy people break bones, need stitches, have car accidents, find out they have illnesses, or are told they need surgery.
You may never be one of them. but what if you are? Medical bills from even a minor car accident can ruin your finances. a serious illness can wipe out your family’s savings. insurance can be expensive, but not having it can cost much more.
Health insurance is now required for everyone in the United States. people without insurance have to pay fines that get more expensive each year. your parents can keep you on a family plan until you turn 26. after that, you’ll need to get health insurance on your own or through your job.
ok, maybe you need it. how can i get it?
There are many different ways to buy health insurance, and the costs and benefits vary widely for each. You’ll need to see what options are available to you, based on your health needs, age, and employment status. you’ll probably also have to read a lot of health care buzzwords.
Here are some ways you can get insurance:
- parent’s plan. in the united states, children can stay on their parents’ health insurance plan until age 26. this is true even if you are married, live somewhere else, and have a job.
- Cobra. Cobra is short for the Consolidated Omnibus Budget Reconciliation Act of 1985. It is designed to protect people from losing their health insurance by allowing them to continue purchasing their current health plan for a Limited time. cobra is designed to protect people from suddenly losing their health insurance.
- short-term policy. Many insurance companies allow you to purchase short-term or “student” insurance policies to bridge the gap between school and your first job. these plans are similar to cobra, although they are generally more basic and affordable.
- employer plans. this is how most people in the united states get their health insurance. It’s also usually the least expensive option, since employers often help pay for some of the insurance. Some employers offer health insurance coverage on your first day of work. others may force you to work first for a period of time (30, 60, or 90 days).
- individual policy. buying health insurance on your own can be a more expensive option than sharing the risk with a larger group of people (like other students, employees, etc.). you may have to pay more if you are considered higher risk, for example, if you do something that affects your health, like smoking.
- The health insurance marketplace. This option allows people who need to buy health insurance on their own to choose the best insurance to meet their needs. it is also sometimes called a health insurance exchange.
- subsidized state program. If you are under 19, have no insurance, and your family income is below a certain level, you may be able to get state help through a program called schip (state children’s health program). insurance program). benefits vary from state to state, so you’ll need to check with your state’s department of health and human services.
- medicaid. Medicaid is also sometimes called “medical assistance.” is another type of government-funded health insurance that is available only to certain people, such as low-income adults and people with disabilities. check your state department of health and human development (hhd) program to find out if you are eligible for medicaid.
what if I have a health problem?
If you’ve been living with an illness, like asthma or diabetes, insurance companies call it a “pre-existing condition.” Insurance companies are no longer allowed to deny coverage to anyone due to a pre-existing condition.
what kind of insurance do I need?
Each insurance plan is different when it comes to what’s covered, what’s not covered, and how much things cost. figuring out which one is right for you is a balancing act: you want the most benefits for the least cost.
Start by looking at all parts of the plan, not just the price you pay. for example, a plan with a lower monthly payment is not necessarily the cheapest: your copay may be very high or you may pay more for your prescriptions. If you don’t have any health problems, you might be fine. But if you see a doctor a lot or take prescription drugs regularly, a more expensive plan that covers more of the cost of seeing a doctor or getting a prescription may be cheaper.
You’ll also need to see if your plan covers things that are important to you. For example, many plans don’t cover things like dental or vision care, counseling sessions, or alternative therapies like chiropractic or acupuncture.
The three main plans you’ll likely have to choose from are: indemnity plans, managed care plans, or consumer-driven health plans.
Indemnity plans are also called fee-for-service or reimbursement plans. With this type of plan you can see any doctor you want at any time you want. You pay the doctor directly and then submit your claim to your insurance company. the company reimburses you part of the total cost. (For example, if your doctor charged you $100, you may get 80% reimbursement or $80.)
Indemnity plans typically don’t pay for preventive care, like annual physicals. Because they offer you the most options, the monthly premium is often higher than other types of health plans.
managed care plans
When you get insurance through an employer, it’s often through a managed care plan. With managed care, a health insurance company negotiates a contract with certain health care providers, hospitals, and laboratories to provide care to its members at a lower cost.
The four basic types of managed care plans are:
- hmo (health maintenance organization). When you join an hmo, you choose a primary care doctor. This doctor coordinates all of your medical care, from annual physicals to hospital stays. Although the copay for these services is usually quite low, the trade-off is that you can only use doctors and hospitals that are approved by your plan. You also cannot see any type of specialist without a written referral.
- ppo (preferred provider organization). a ppo is like an hmo, only with more flexibility. Instead of choosing a primary care doctor, you can see any doctor you want. however, if you choose a doctor who participates in your plan, you will pay less.
- POS (Point of Service). With a POS plan, you generally choose an in-network doctor for most of your care, but you can go outside the network if you need to see a doctor. specialist. if you go out of network, you may have to pay more.
- epo (exclusive provider organization). an epo is like a ppo, only the network of participating doctors is smaller.
consumer driven health plan (cdhp)
This type of plan is fairly new. allows you to set aside a certain amount of money in a special savings account for health insurance. you are in charge of how you use this money to cover your health care costs. however, the deductible you have to meet is usually higher than other types of plans.
It may seem strange to buy something you may never need. so think of health insurance as an investment in your peace of mind. Since peace of mind means less stress, you’ll start enjoying the health rewards right away!