Health insurance is not rocket science, but if you are not familiar with a few key terms, you might think it is a convoluted process that starts with you getting sick and (hopefully) ends with you recovering as soon as possible and remitting the deductible amount and, sometimes, the co-payment your insurance policy requires. The most important elements in a health insurance policy pertain to the type of plan you have, coverage lapse conditions, what a typical policy covers, and how to reduce insurance premiums.
Is My Employer Required to Provide Health Insurance?
State or federal legislation does not require that your employer provide 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 forgone 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.
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.
What Are the Various Types of Health Insurance Providers?
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. See below for a more detailed description of each health insurance plan:
- 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
- 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
How Can I Reduce My Health Insurance Premiums?
You can reduce your health insurance premiums by increasing your deductible, which is money you remit to the health care provider before your insurer reimburses you. 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. A third way to reduce premium payments is to purchase multiple policies with an insurer, adding things like life insurance and car insurance to the mix.
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.
- You should be cautious if you hear an insurance plan market itself as "Obamacare," especially if it touts its coverage as one that is in sync with the Patient Protection and Affordable Care Act, also known as Obamacare. You have no business associating yourself with an insurance plan named after a U.S. president.
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.