The Basics to Buying Health Insurance
Having health insurance is more important than most people realize. However, buying health insurance can be a costly proposition and one that should not be taken lightly. Below are some factors and issues you need to keep in mind when buying health insurance.
Benefits of Health Insurance
Even if you are reasonably healthy today, you never know when an accident or sudden illness may require significant medical care, possibly even hospitalization. On average, the cost of a single night in the hospital is $6,500 and that does not cover your doctor’s visits or any tests performed after you are admitted. Tests are also extremely expensive. The commonly used MRI test can cost as much as $2,000 while X-rays cost several hundred dollars not including the charge of the radiologist who must interpret them for your physician. A single accident could set you back more than $10,000 easily if you do not have health insurance.
Individual VS Employer
In the United States, the majority of people who do have health insurance receive their coverage via a group plan offered by their employer. Under this type of arrangement, all of the employees form a large pool of insured people who share the costs of caring for the other members of the pool. Because some members will need more medical care than others, the risks and costs are balanced out so the premiums can be lower.
With an individual health insurance plan, you are getting the insurance by yourself or with your immediate family so you cannot form a group in order to lower your premiums. As a result, premiums do tend to be much higher for individual than for group plans.
In recent years, however, employers are starting to either scrap health insurance benefits because of their high cost or pay less towards the premiums for their employers. Some employers have also started switching to Health Savings Accounts (HSAs) for their workers.
Charges Associated with Health Insurance
Although you may make a purchasing decision based primarily on the cost of your premium, this is not the only cost associated with health insurance. To make the right choice for your budget, you need to consider all of the different costs associated with the policy. First, you may have a deductible. This is an amount of money you must pay out-of-pocket before the insurance will begin paying for anything. Higher deductibles lower your premiums but may still make medical services too expensive.
Another possible charge is co-payments. These are small payments, usually $10 to $25, which you pay at the time of medical service. These can add up, especially if you have to pay them each time you see the doctor and get a prescription filled.
Finally, you may be asked to pay co-insurance. This is when you and your insurance provider split the cost of the medical services you receive. For example, if you have surgery, your insurance provider may cover 80% of the charges but you’ll still be responsible for paying the remaining 20%.
Major Types of Insurance: HMO
Today, you’ll find two main types of insurance plans available: HMO or PPO. With all three options, you’ll need to choose a primary physician. How things are handled afterward vary. With an HMO (Health Maintenance Organization), you must go to your primary physician first before having any tests or seeing a specialist. If your primary physician does not refer you for these services, the costs will not be covered by your insurance. Also, if you choose to go outside of your HMO network to see a physician, your insurance will not cover these costs.
Major Types of Insurance: PPO
With a PPO (Preferred Provider Organization), you have more flexibility because you can choose if you want to see a specialist and if you want to pick a network physician. However, you do end up paying more. While HMO plans usually do charge co-insurance, PPOs do. Plus, you’ll have to pay a larger percentage of your bill if you choose an out-of-network provider.
Pre-Existing Conditions
With a group health insurance policy through your employer, pre-existing conditions are not usually going to be a factor. However, that is not going to be the case if you need to purchase an individual policy. A pre-existing condition is an umbrella term for any type of injury or illness you had prior to stating the coverage of your new policy. For example, if you had a knee injury while covered by a former policy, your new policy will not cove treatment for your knee.
In some cases, the pre-existing condition does not have to be diagnosed. If you have shown symptoms that would have lead a reasonable person to seek a medical diagnosis, the insurance may refuse to pay. If you have too many pre-existing conditions or if you have numerous factors that make you a high medical risk, insurance companies may refuse you coverage.
High Risk Pools
To help people who have been turned down for medical insurance, some states have developed high risk pools. These people basically form a group so they qualify for a group policy but because they pose such a great financial risk to the insurance providers, the costs of these policies are extremely high.
Policy Exclusions
In efforts to cut costs, many health insurance policies are not offering coverage for prescriptions, pregnancy care, and other medical needs. Make sure to check your policy carefully so you know which of your expenses will be and won’t be covered.
March 15, 2009, Posted by Rainy Day Mitch