Understanding health insurance

Health insurance is a vital part of keeping both yourself and your financial life healthy. But health insurance can be confusing. It can take a little research to understand health insurance policies and choose the right one for you.

Health insurance can be purchased by a group – as in a company purchasing it for its employees – or by individuals. If your employer offers health insurance, by all means obtain coverage through your employer. Your employer can get a much better rate than you could by buying individual health insurance.

Health insurance choices
There are many different choices when it comes to health insurance. In part, the type of health insurance you choose depends on what your employer offers, but you also have to decide which type of health insurance policy works for you.

• Indemnity/fee-for-service health insurance plans – This type of health insurance isn’t based on a provider network. Payments typically come from a percentage of the charges.

• HMO – An HMO uses a network of providers. This is usually a closed network, which means you have to use the doctors approved by your insurance plan if you want your insurance to pay.

• PPO – This is an open network. That means that there are financial incentives to use the medical providers in the insurance’s network, but you can see a provider out of network and usually have some of the costs covered.

• HSA – A health savings account is an untaxed private bank account used for medical expenses. Unused money may not roll over for the next year, but may go to your employer instead.

• FSA – A flexible spending arrangement is similar to an HSA. You set aside money pre-taxes to use for medical expenses, but you have more flexibility about your money staying with you.

Whichever type of health insurance you have, you need to be familiar with the rules and procedures of the company. Many times you need a referral from your primary doctor for visits to any other medical professional. If in doubt, call your health insurance company. Don’t just assume that something is covered. It can be quite a headache to have to appeal a denied claim.

A word about individual medical insurance – if you do not have a job that allows you to obtain coverage through it, then you’ll have to find private health insurance. This comes at a very high price. The employer as a distinct advantage when buying insurance since it is for a group. It can be difficult to find affordable health insurance. And, there is no guarantee that you can get the coverage that you need.

Usually with group medical insurance, there is no need to have a physical exam to qualify. With individual health insurance, the insurer factors in your age and weight, whether or not you smoke, your medical history, and the results of a medical exam. Some states require all applicants to be accepted for insurance coverage no matter the medical history. However, that means the premiums for everyone in that state are very high. Other states do not regulate the insurance industry as much, which means lower premiums. But, then there is the risk that you can be denied coverage because of your medical history.

If you find yourself between jobs and are considering individual health insurance, you may want to look into COBRA benefits from your previous employer. This allows you to continue coverage you had with your job, but you do have to pay high premiums. However, often even those premiums are cheaper than individual health insurance rates.

Medical insurance can be very complicated. Sit down, access your needs, and sift through the options from your employer or from Internet comparison sites. Take your time deciding on the health insurance policy that is right for you.


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