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Health
Insurance 101
What is health Insurance?
Even if you are young and healthy, it makes sense to invest
in health insurance for those unfortunate moments. It covers
the costs of doctors and hospitals, even long-term care and
dental.
Different types of health insurance
Broadly speaking you can secure two types of health insurance
plans:
1. Indemnity plans – you can choose
your own doctors and pay for your medical expenses - totally,
in part, or up to a specified amount per day for a specified
number of days.
2. Managed care plans such as health maintenance organizations
(HMOs), preferred provider organizations (PPOs), and point
of service (POS) plans. These plans offer broader coverage,
but you can only seek in-network health-care providers (doctors,
hospitals, etc.)
Coverage
Most health insurance companies would offer coverage which
includes hospital expenses, surgical expenses and physicians'
expenses. Depending upon the company and plan that you take,
your policy would also cover - prescription drugs, preventive
care, mental health benefits, maternity care and vision care.
Cost – Analysis
When considering which type of health insurance policy would
be good for you, you should also undertake analysis not only
on the coverage but also the cost attached. You as a member
would be required to make the following payments:
• Monthly premium
• Co-payment - an amount you are required to pay each
time you visit the doctor.
• Deductible - the amount you pay toward the medical
expenses incurred.
• Coinsurance - the percentage of medical costs that
you are required to pay over and above deductibles.
Remember each company offers several difference
packages. Each package may differ in price, coverage, etc.
There is no standard coverage and no single plan that will
cover all the related medical costs. Compare how each plan
handles the coverage, co-payments, co-insurance, deductibles,
any pre-existing conditions and limitations on devices, drugs,
or access to specialists.
The lowest premium may not necessarily be the cheapest –
it may have higher co-payments or deductibles. Similarly paying
a high price does not get you all the coverage. If you are
young and mostly healthy, you may take a risk in form of –
“catastrophic coverage”. Under this scheme, you
may sign up for a high deductible and in return get a 50 percent
decrease in your premium. Don’t rule out the online
services, subsidized insurance such as Medicare (if your income
is very low) or flexible spending account.
Where should you get health insurance?
If you are employed – then your best bet would be the
group coverage offered by the company. Even if you are required
to pay for it – chances are the rates will still be
discounted. You can also purchase an individual plan on your
own as many self employed do. Or you can seek other group
affiliation such as a church or a small business organization.
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