Health insurance has become a hot-button lately debated openly in the news, from politicians, and even at the family dinner table. Health insurance is an essential service to help cover costs and reduce expenses from emergencies to prescription meds.
Understanding the ins-and-outs of health insurance can be difficult, however. The best health insurance companies offer different plans and policies; and have their own rules to follow.
You can check out which health insurance company suits your needs, but below is an introduction to the basics of health insurance and some easy tips on how you can save money when you sign up.
What Does Health Insurance Cover?
Health insurance covers a hodgepodge of things, depending on the policy, insured person and coverage provider. Typical elements covered include:
- Rehabilitation services
- Outpatient treatment
- Doctor visits, be they in or outside the insurer's network
- Prescription medication
- Preventive care
- Imaging and laboratory tests
- Mental health
- Substance-abuse care
Don't think this list is exhaustive or, rather, that it is overly complex. You never know what type of care you would need until you are faced with illness or an injury.
Make sure your health insurance plan picks up out-of-pocket medical expenses after you fork over money for deductibles and co-insurance remittances.
Health Insurance Provider Types
There are four basic types of health insurance providers in the United States: fee-for-service plans, health maintenance organizations (HMOs), preferred provider organizations (PPOs), and point-of-service plans, which are combinations of HMOs and PPOs.
Normally, both PPOs and HMOs rely on networks of health care providers, say, doctors and hospitals, to minimize costs and create operational efficiency.
- Your co-pay typically ranges from $10 to $20 during normal working hours
- You can visit a specialist (who is in the plan's network) at any time
- If you go out of the network, you pay for medical treatment upfront and then submit the bill for reimbursement
- Deductible can be high
- The plan may require a higher co-payment option if your doctor's fees go beyond what the plan considers normal and reasonable
- Low payments when compared to other plans
- Less paperwork
- You get covered even for programs aimed at improving health as well as preventive care
- You can select a doctor from a large network of practitioners
- You pay a small fee when you visit a physician
- A wide assortment of physician services, including emergency room visits, mental health services, outpatient care and comprehensive medical treatment.
- You have to select a primary-care physician
- You must receive permission from the plan before choosing a physician who is not in the plan's network and you typically pay a higher proportion of the medical care cost
- The plan will not reimburse you for lab work if you the work requires the intervention of a physician who is not in the plan's network
3. Point-of-service plans
- Coverage can still apply to you if you choose to visit a doctor out of the plan's network
- Focus is more on well-being services and preventive care – think of gym discounts and symposiums on how to quit smoking
- A primary-care physician is needed
4. Fee-for-service plans
- No need to choose a doctor within a network
- No permission needed from a primary care physician before you see a specialist
- Numerical cap for how much you pay in medical costs during a year (co-insurance and deductible)
- High deductible to pay before the plan doles out cash for medical treatment
- Possibility of paying medical bills upfront and then submitting them for reimbursement
- You pay for the difference if your health care provider charges more money than what the plan considers "reasonable and customary" billing
- Certain health may be excluded from your policy
Where Do I Shop for Health Insurance?
We live in an economy in which information is power and the Internet has asserted its ubiquity on everything from medical care to premium payment to personal data archiving to healthcare cost tracking. So, use online tools like eHealthInsurance to get a quote or compare the various medical insurance packages that are out there.
This is an important money saver because you certainly want to entrust your (and your family's) medical coverage to a reputable yet affordable healthcare plan.
Should I Change My Lifestyle to Lower my Health Insurance Premium?
Wells Fargo recommends a lifestyle change that can help you stay healthy and gradually reduce your overall medical coverage bill.
The bank suggests that you get an annual physical, read current healthy lifestyle information and change their behavior accordingly, exercise regularly and limit alcohol consumption.It also suggests that policyholders willing to curb their health insurance costs quit smoking, make healthy eating choices and take only medication prescribed by doctors.
Health Insurance Savings Tips
Here are some tips on how can reduce your health insurance premiums with only a few small lifestyle changes.
Increase Your Deductible
You can lower your health insurance bill by raising your deductible, which is the out-of-pocket expense you would incur should you, for example, need an emergency procedure or another type of life-threatening event requiring hospitalization.
Talk to your insurance agent to learn more how much you would save under different deductible scenarios.
Exercise & Stay Healthy
Another way to curb your premium is to be physically fit and avoid banned substances or other items that could produce a short-term medical hazard or wreak metabolic havoc in your body in the long term – think smoking, for example.
Purchase Multiple Policies from the same Company
This may seem counterintuitive, but many insurance companies offer a sort of bundling discount when you buy more than one kind of insurance policy from them, such as life insurance and car insurance. It's a good idea to talk with your insurance agent to see if this is possible for you.
Cut Down on Hospital Bills
Negotiate with the hospital. For expensive surgical procedures or visits to the hospital, you may be able to opt for a monthly financing plan.
Ask for Cheaper Medication
Of course, you always can ask the doctor to prescribe affordable drugs, the kind that wouldn't break your bank anytime soon. Cheaper medication often is generic and not brand-name, but it heals and does the same medical trick.
Doctors typically don't have much information about the cost of drugs, so you should ask your doctor if there's a less expensive but equally effective alternative to the drug he or she prescribed to you. Just be sure your doctor is aware of the benefits and risks of the alternative drugs for your condition.
Refill Prescriptions Cheaply
Try big retailers like Costco and Walmart. Check with each of them to learn more about their savings plans, eligibility criteria, and discount programs.
For example, Walmart offers a large assortment of products and services that include pharmacy services, $4 prescriptions, health insurance and benefits, pet prescriptions and specialty pharmacy services.
The other big retailers offer similar products and services, but suffice it to say that any other retailer, be it small or midsize, typically has a program through which you may save big on everything from medications to medical equipment and supplies.
Is My Employer Required to Provide Health Insurance?
State or federal legislation does not require that your employer provides you with health insurance. Companies typically provide medical coverage to prospective employees as a non-monetary incentive designed to attract and retain their workforce.
This strategy is economically sensible because it costs a business money to hire and train employees, so when staff members leave – something specialists call "attrition" – the organization incurs losses in terms of foregone talent and opportunities for operational efficiency.
State legislation, however, mandates that when a company decides to provide health insurance to its employees, it must include certain benefits.
Talk to your company's human resources department to learn more about the organization's health insurance plan.
Am I Still Covered if I Lose My Job?
If you lose your job, you still can be covered for up to 18 months, in accordance with COBRA stipulations. The Consolidated Omnibus Reconciliation Act (COBRA) allows you to receive medical coverage as long as you pay the full premium plus a small administrative fee.
Note that if you have had medical insurance for the last 12 months, and never had any coverage lapse of 63 days or more, your new employer cannot exclude your pre-existing conditions from a group health insurance plan.
How Do I Distinguish Real Health Insurance from Junk Health Insurance?
You can verify a few things to distinguish junk health insurance from coverage provided by a reputable, state-registered insurance company. Warning signs include:
- The name of the company sounds odd, vague, and generic – something like US Universal Heath or Medical Coverage, Inc.
- The company wants you to be a member of an association you have never heard of.
- The insurance plan guarantees your acceptance without reviewing your application file, delving into your medical history, or considering your pre-existing conditions – if you have some.
- The premiums are so low, you can't believe it. Well, if it sounds too good to be true, then certainly it is not true. Contact your state's Insurance Commissioner's Office to learn more about the company as well as to have a general idea of how much medical insurance costs in your state.
- Beware if you see the phrase "Not Major Medical"; it means the policy does not provide comprehensive health care.
Understanding Health Insurance Recap
Now that you understand health insurance basics, you are better armed to make informed decisions about the type of policy you want, the plan you would like to sign up with, and potential consequences when you do not pay your premiums on time. Other important elements to remember when choosing a medical insurance policy include the distinction between reputable health insurance vs. junk medical coverage, the best way to reduce your premiums, and what health insurance actually covers.