DEFINITION OF HEALTH INSURANCE
Health insurance is a type of insurance that helps cover the cost of an insured person’s medical and surgical treatment cost. There are different types of health insurance in the USA.
Insurers use the term “provider” to describe a clinic, hospital, doctor, laboratory, healthcare practitioner, or pharmacy that provides treatment for an individual’s condition.
The “insured” is the owner of the health insurance policy or the person with the health insurance coverage.
In this article, learn more about what health insurance is, why it is important types of plan
Health insurance policy is an assurance which provides immediate financial help in case any medical emergency arises. It is a contract between a policyholder and the insurance company which covers medical expenses and treatment that might occur due to illness, injury or accident. If you have a health insurance policy, then some or all the medical expenses will be conducted by the insurance company, against which an insured is supposed to pay a certain amount known as premium.
There are two ways by which which the insurance company compensate for your medical expenses:
Cashless Treatment: The policyholder is not supposed to pay anything to the hospital. The insurance company pays the hospital directly.
Reimbursement: Here, the policyholder is supposed to settle their medical expenses first and later ask for reimbursement from the insurance company.
Why Should I Have A Health Insurance Policy?
Purchasing a health insurance plan is something that we all avoid till the time we understand its importance. Before purchasing one, it is essential to understand the various benefits of a health insurance plan as medical emergencies can occur at anytime and could make a big hole in the pocket. Therefore, it is advisable to purchase a health insurance policy at a very tender age, where one can have the comprehensive coverage at an affordable premium cost, plus you also get the advantage of tax deductions on premium paid.
In a nutshell, one should purchase a health insurance policy because:
- It facilitates an individual to get medical treatment without any worry of high medical costs.
- Offers specialized coverage for critical illnesses.
- Covers road emergency ambulance costs.
- Offers an affordable premium for youngsters.
- Provides cashless claim benefit, which allows you to take care of your health instead of worrying about hefty medical bills.
- Protect your savings during medical emergencies.
- Provides tax benefits under Section 80D.
- Lastly, it safeguards you and your family and protects your savings and other financial needs that may occur
Health Maintenance Organization (HMO) Plans
HMO plans are co-pay plans that typically require participants to select a primary care physician (PPC). HMOs have a deductible that needs to be met before coinsurance takes effect for most expenses and comes with an out-of-pocket maximum. HMOs only cover expenses related to in-network providers.
Flexible spending accounts (FSA) are typically offered alongside traditional co-pay plans. An FSA is a taxed advantaged plan that can be used to pay for qualifying medical expenses. The IRS sets annual contribution limits.
Preferred Provider Organization (PPO) Plans
PPO plans are co-pay plans that are very similar to HMO plans. The key difference is that they will cover out-of-network provider expenses, whereas an HMO will not. In-network provider expenses are covered to a greater degree than out-of-network expenses.
High Deductible Health Plans (HDHPs)
HDHP insurance comes with a high deductible, as the name implies. For a plan to qualify as an HDHP, a deductible has to be $1350 or higher for an individual and $2700 for a family. Employees typically need to meet the deductible of an HDHP before the co-sharing aspect of the insurance comes into play. Like a PPO and HMO plan, common services covered included lab tests, office visits, and prescriptions. Some HDHP insurance will cover out-of-network costs at a lower degree than in-network costs, and some will not cover out-of-network costs at all.
To help offset the up-front cost of high deductibles, HDHPs are often accompanied by a health spending account (HSA). An HSA works like an FSA as a tax-advantaged spending account to cover qualified medical expenses. Unlike FSAs, HSAs allow employers to contribute to the plan and do not have a “lose it or lose it” clause. Once the money is deposited in an HSA, it is the employees to keep, even if they do not remain employed with the company.
Dental and Vision Insurance
Dental and vision insurance are much less costly compared to medical insurance. Standard dental insurance typically covers two check-ups per year, cleanings and x-rays at 100%, and a portion of other services, like fillings and crowns. Standard vision insurance covers annually check-ups and a part of necessary eye care prescriptions, like glasses and contacts.
Like medical insurance, dental and vision insurance often have a deductible, and in-network providers are covered to a higher degree than out-of-network providers.
