Health Insurance Basics

In reality, everyone gets sick or hurt at some point in their lives even if they do not plan to. This inevitability is why there are medical professionals and facilities available to help people get better.

However, medical services can be extremely expensive and a huge financial burden, which is the reason health insurance exists. Health insurance is not only required by law, but it is necessary to maintain good health and treat illnesses or injuries. It prevents any financial burden due to costly medical bills. People can receive essential medical care like preventative and emergency services through any health plan as mandated by the Affordable Care Act. Despite these basic benefits, health care can be very complex. The trick to getting quality, affordable health care is understanding the health care system.

Health Insurance Terms Explained

Understanding the basic terms of health care will help you find the best health insurance plan. The goal is to find a health plan that fits your medical needs and offers great doctors and facilities at the right cost. Knowing provider terms will help you understand which doctors and facilities are covered under your health insurance plan. A preferred provider is a licensed health professional or facility that is contracted with your insurance company to offer medical services to you. A network is a compilation of preferred providers that are covered partially or entirely by a health insurance company. An out-of-network provider is a health care provider that does not have an existing agreement with the insurance provider and may not be covered under your plan.

There are many types of insurance plans that you will need to identify when comparing health plans on the market. These include exclusive provider organization (EPO) plans, health maintenance organization (HMO) plans and preferred provider organization (PPO) Plans. EPO plans are more restricted to a network of doctors, specialists and facilities. HMO plans restrict their consumers to in-network providers but provide a larger selection of contracted health care providers. PPO plans will contribute a small portion to out-of-network providers, yet still prefer that you stick with in-network providers.

What is the Affordable Care Act?

The Affordable Care Act is a health care reform law that came into effect when signed by President Barack Obama on March 23, 2010. The Affordable Care Act aims to make health care attainable and affordable for all Americans. Health care plans that existed on March 23, 2010 may continue offering the same unique coverage plans and are not entirely affected by the Affordable Care Act. People who were enrolled in these health plans before the Act may maintain their plans. Besides these health plans that were “grandfathered in,” other health plans must meet specific rules and regulations. For example, the Affordable Care Act prevents health insurance companies from denying coverage to those with pre-existing conditions.

Health care plans are also not allowed to administer penalties and fines if an individual obtains emergency service from an out-of-network provider. In addition, the Affordable Care Act provides an incentive for states to raise their minimum income eligibility requirement for Medicaid. Depending on the state, many people with incomes equal to or below 138 percent of the federal poverty level may be eligible to receive Medicaid.

Moreover, The law regulates the health care system by requiring health care plans to cover essential health benefits. These essential health benefits include:

  • Chronic disease management, preventative care and wellness services.
  • Ambulatory patient services.
  • Emergency services.
  • Prescription drugs.
  • Mental health and substance use disorder services.
  • Maternity and newborn care.
  • Laboratory services.
  • Hospitalization.
  • Pediatric services.
  • Rehabilitative and habilitative services and devices.

Understanding the Costs of Health Insurance

Understanding the costs of health insurance is important when picking a health plan that fulfills your medical needs and is cost-effective. The four main price components that you need to consider are premiums, deductibles, copayments and co-insurance. For plans with lower premiums and higher deductibles, you will pay more out-of-pocket costs. However, this could be more cost-efficient if you rarely pay a visit to the doctor’s office. On the other hand, plans with higher premiums and lower deductibles cover more of your medical costs. This means you do not have to make as many out-of-pocket payments if you need a lot of medical services.

You may be eligible to receive financial assistance for out-of-pocket costs by applying for cost-sharing reductions. It is a federal subsidy that reduces out-of-pocket costs. In addition, you can be a savvy health insurance consumer if you understand how to get cheaper plans. For example, employer group insurance plans can save you money on your premiums because they generally split the costs with their employees. In addition, the money you use to pay your monthly premiums is pre-tax, meaning you will pay less on your taxable income.

Health Insurance for Families

For parents looking to get quality health care for their families, choosing a family plan best-suited for their family at a good price is essential. First and foremost, it is important that parents consider their family medical needs, their budget and any specific doctors or facilities they want to remain patients of. Households should weigh out the risks when deciding if they want a family health insurance plan with a low premium and high deductible or vice versa. In addition, families should consider the effect adding elderly members will have on the rates of their premiums. Adults who want to add their parents should consider the high risks associated with their age and the benefits that other individual plans can provide for their comprehensive medical needs.

Having a family health plan is generally much cheaper than having individual health plans for each member. Family plans typically have special accommodations and discounts. For example, some plans only include your three oldest children when calculating your premium costs. This is great for families that have more than three children. Low-income families may qualify for family health plans through Medicaid. Medicaid is a health insurance program funded by the federal government and administered by the state. Eligibility depends on a family’s size and income. For those families whose income are too high, parents can obtain health insurance for their children through the Children’s Health Insurance Program.

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