Healthcare Explained: How Does Health Insurance Work in the US?

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With a limited enrollment period, unintentionally choosing the wrong health insurance policy is highly probable, especially if you rush into it and forget to compare insurance plans. Picking the best insurance offer for yourself or your family can be tricky unless you learn all the peculiarities of available medical plans and identify the most suitable ones.

The ever-dynamic health insurance industry allows no mistakes to policyholders. Given that today, healthcare is closely associated with insurance, any regular or urgent medical assistance requires significant expenses. In case you are underinsured, or even worse, uninsured, you might find yourself overpaying and exhausting the funds. Understanding the basics of how to use insurance is crucial to deal with all the risks and take care of your financial and physical health.

Understanding How It Works

Asking yourself, “What health insurance should I get?” can be helpful in terms of understanding your needs. However, to make the right choice, you need to start with learning about the way any insurance policy works. In a nutshell, there are three main stages of utilizing your insurance: 

  1. You, paying your deductible.
  2. You, paying your share of co-pays or co-insurance, and the insurance company, paying the remaining amount.
  3. You, reaching the out-of-pocket limit, and the insurance company, covering all the remaining costs (up until your annual coverage limit is met).

When broken down into simple steps, the process seems less complicated and starts making more sense. However, apart from understanding how medical insurance works, you also need to learn more about all the payment types you will have to face sooner or later.

Deductible – a set sum of money you pay until your policy kicks in.

Co-insurance is based on the cost-sharing principle. In this case, the policyholder is paying a set percentage of the bill, and the insurance company is covering the remaining sum. 

Co-payments – are the payments split between two parties – insurer and insured. In this case, the payments represent set sums, not the percentage.

Out-of-pocket limit – the maximum amount a policyholder can pay out of his own pocket for medical services in a given year.

With the wide variety of insurance offers available on the market and multiple companies providing essentially the same service, there is still a need to choose the most affordable and appropriate policy. To pick a health insurance coverage that can help you be prepared financially for an accident or illness, you need to study the types of medical insurance available in the US.

How to Choose a Health Insurance Plan

It is a common practice for employers to take care of their employees’ health coverage. However, the group plan you might be a part of is not a long-term option given that you might be laid-off, want to change jobs, or retire one day. In this case, you can have a backup plan called COBRA coverage. It can come in handy as a short-term option before you choose more sustainable coverage.

Simply put, there are two basic types of health insurance in the US – public and private. Both options can help you protect yourself and your loved ones. Depending on the eligibility, age, lifestyle, and personal preferences, you can choose either of them. However, you need to carefully assess your healthcare needs and financial situation before making a choice. Here is a list of essential steps that can come in handy when you decide to shop for insurance. 

  1. Figure out where to buy a plan and compare available offers.

Shopping around is a perfect approach when it comes to picking a suitable plan. To compare rates and plans, you can use online quote comparison tools, check marketplaces, private exchanges, and research the policies individual insurance companies offer. But bear in mind that plans available in the marketplace tend to cost a lot more.

  1. Learn about available plans.

When it comes to public plans, Medicare is the most popular option. It consists of the Original and Advantage plans. The Original Medicare has Part A and Part B available for admitted and not formally admitted patients respectfully. However, you are eligible to receive this coverage if you are 65+ or younger and have a disability. What is more, it is accepted by most of the hospitals and doctors in the country. 

While researching individual plans, you will encounter such options as HMO, PPO, EPO, or POS, for instance. In this case, every insurance plan will require different payment volumes and sometimes referrals to visit any specialist. Besides, all of the private companies will offer different conditions, like a network of doctors and hospitals. While one can be more pocket-friendly than the other in general, it depends on which option makes more sense to you. Besides, there are also indemnity plans that allow having no primary care provider and visiting any doctor and any medical facility. But keep in mind that these plans tend to be more expensive. 

  1. Compare networks offered by individual health plans.

In most cases, you will not have to pay any extra costs if you visit only in-network medical facilities or doctors. However, if you choose to visit an out-of-network provider, you should expect your out-of-pocket payments to increase. To make sure that you can stick with your healthcare provider, you can ask if he or she takes any of the health plans you would like to buy. If you do not mind receiving medical services elsewhere, feel free to balance the costs and pick the most suitable option.

  1. Compare the offered benefits.

This step will help you to narrow down your options. In a nutshell, you need to look for an insurance option covering a broader range of services. Again, it depends on your personal needs like mental care, physical therapy, or emergency coverage, for example. By comparing the benefits policies offer, you can find what you and your family need.

Before making your final choice, consider finding out if prescribed drugs (if you need any), dental services, maternity leave, or traveling abroad is covered by the preferred plan. In case you uncover any additional needs or requirements you might have along the way, you can always take out a supplemental health plan. After all, you might even discover a possibility to get a bundle offer or a discount.

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