What Is Health Insurance: Coverages and How it Works
Health insurance is insurance coverage that pays for medical expenses for illnesses, injuries, surgeries, and conditions. In most cases, health insurance is offered by employers as a means of enticing top talent to stay on with the company. Sometimes, health insurance reimburses an individual after they received treatment, sometimes the insurer pays the provider directly. Health care benefits are tax free.
Usually, to get the most amount of coverage, patients must seek doctors and practitioners within a network of providers. Specialists are chosen by primary care providers, who are also in the same network. If patients go outside the network, they pay more of the cost of care. In some cases, they may even be refused any reimbursement for services obtained out of network or if the services weren’t preauthorized. Insurers also sometimes refuse payment for name brand drugs if there is a cheaper generic alternative available.
Just as with car and home insurance, it’s important to look at the deductibles in a health insurance plan. Health care plans that offer lower monthly premiums usually do not cover very much and carry high deductibles. The deductible is what you pay when you visit the doctor when you have a Health Maintenance Organization (HMO) plan. When you have a Preferred Provider Organization (PPO), you pay for medical care out-of-pocket until you reach the deductible limit. After that your insurance begins to cover your costs.
Coinsurance and copayments are also costs that some health insurance plans require. A coinsurance is usually broken down by percentages owed by the insurer and the percentage owed by you, the insured. Copayments are a set amount, usually under $60 and possibly as low as $15 per visit. Preventive care and screenings often carry no copay or coinsurance.
In 2010, President Barack Obama signed into law the Affordable Care Act (ACA), which prohibits insurance companies from denying patients coverage if they have a pre-existing condition. It also allowed children to remain on their parent’s insurance plan until the age of 26. Medicaid was expanded in many states and there was an individual mandate that you had to carry health insurance or face a tax penalty. The individual mandate was repealed in 2018. As of 2019, you will not be fined for not having health care coverage.
Medicare covers individuals age 65 and older as well as people with disabilities. The Children’s Health Insurance Program (CHIP) covers children, whose family meets the income eligibility. These programs provide no-cost or low-cost health insurance coverage and dental care.
For people eligible for Medicare, there is also a private health insurance alternative to Medicare but you must enroll first in Medicare Part A & B to qualify for Medicare Part C (also known as Medicare Advantage). To help with copays and coinsurance, there is also Medigap, which has a set premium and no other out-of-pocket costs. It will in fact cover all your out-of-pocket expenses with your Medicare coverage.
Things have changed with federal healthcare requirements. Is Health Insurance Required by Law? From 2010 to 2018, there was an individual mandate that every person had to buy health insurance if it wasn’t provided by an employer or else they’d face a tax penalty. Since 2018, the individual mandate in the Affordable Care Act has been repealed.
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