There are many types of health insurance policies, and each type has its own coverage rules, co-pays and deductibles, limits on expenses incurred, and premiums. Health insurance premiums are a deductible expense for income tax purposes in the US.
Some policies cover the cost of hospital and physician charges as well as prescription drugs, while others only provide coverage for specific diseases or illnesses. Some pay fixed amounts directly to the service provider, while others reimburse the insured for their portion of the service costs. For example, 80% with 20% coinsurance.
Additional funds may be available if the patient qualifies for a clinical trial. Depending on your location, health care coverage may also include dental, optical/vision, mental health care, in some cases, assistive devices, alternative therapies, and more.
Basically, health insurance is defined as any plan, such as vision premier, that cater for medical expenses, either via social welfare plan, social insurance or privately purchased insurance, social insurance, or a social welfare program.
Here are different types of health insurance
Types of Health Insurance
Health maintenance organization (HMO)
A system where costs are typically lower because members have less choice in providers. Instead, members generally go through a primary care physician who helps manage their medical needs, including referrals to specialists. The drawback is that HMOs tend to have higher deductibles, so patients pay a set amount out-of-pocket before the plan covers services.
Preferred Provider Organization
A preferred provider organization (PPO) is a type of managed care organization that negotiates discounted rates with health care providers and then bills the individual and their health plan for any services rendered to members of the health plan. PPOs primarily differ from other types of managed care organizations in that they are required to accept all applicants for enrollment and cannot deny coverage based on pre-existing conditions.
HSA
An HSA is a type of high-deductible health plan in which consumers can set aside money tax-free for future medical expenses. This helps them save for these expenses, as well as recoup their money if they don’t end up needing it. Banks and credit unions commonly offer HSAs to their customers.
A deductible is a certain amount the insured person must pay out of pocket before his insurance kicks in and begins paying its share of the cost. Deductibles vary by plan and policy, but they do have to be met before any coverage takes effect, with some exceptions. The deductible can be paid in a single lump sum at the beginning of the year or over time through monthly payments, depending on the plan’s requirements and when you opt to begin making payments.
Fee-for-service
Fee-for-service is a pretty straightforward system. You choose your doctor. This can be done directly, as you might go to a specialist who takes payments on their own, or it can be done through an insurance company that pays eye doctors for the procedure they perform. This means it may make sense for patients with vision problems to seek a specialist. With this type of insurance, you will only have to pay for your services when you use them. While this is convenient for patients who don’t want to worry about carrying around a bunch of monthly premiums or co-pays, it does mean that there are no limits on how much you’ll pay out of pocket every year. It also leaves it up to both patient and doctor to negotiate payment options for each visit.
Managed Care
Managed care is a health insurance system involving a third party – an insurer or managed care organization – who will oversee a patient’s care to reduce costs. This can involve restrictions on the patient’s freedom to choose certain kinds of treatment or the use of specific providers, as well as financial incentives for patients and providers to forgo more expensive treatments.
Exclusive provider organizations (EPOs)
EPOs are becoming increasingly common in the health insurance market. They offer the benefit of a single network of doctors, hospitals, and other providers, so you don’t have to do any work to find providers that your plan covers.
Tips for Choosing the Best Health Insurance Plan
Choosing the right health insurance plan is a complicated process. In addition to considering the monthly premium, deductibles, and co-pays, you should also consider important things like your residence and family size. If you are covered in case, you need to visit a doctor or hospital out of state. Other factors that can affect your health insurance plan’s cost include prescription coverage, maternity coverage, mental health coverage, substance abuse coverage, dental care, and vision care.
Know what your insurance plan covers
Every insurance policy is different, so make sure you understand your plan and know exactly what it covers. For example, some plans might not cover certain prescriptions or routine procedures like office visits. It’s essential to be aware of which services are covered and what conditions and exclusions are involved with each service. This can save you money and headaches in the long run.
Avoid being overwhelmed by insurance jargon
A handful of companies offer a multitude of products, but when you look at all the available options, it can seem nearly impossible to understand which one is best for you. The easiest way to quickly cut through the noise is to look at the total cost of coverage instead of just premiums. Most plans will have a deductible or coinsurance that you have to pay out-of-pocket before your plan kicks in, so it’s essential to consider that when considering your monthly premium costs, especially your annual deductible costs.
Look beyond premiums
If you’re like most people and spend a few minutes shopping around and comparing prices on plans, you might be tempted by the lowest premium plan out there. Don’t be. While premiums are an important thing to look at, they aren’t the full story when putting together a budget for what it will cost you over time
Key Takeaway
Health insurance is a contract between an insurance company and an individual or group. The insured party, referred to as the policyholder, pays a premium to receive health care services from the insurer in exchange for which the insurer promises to pay for certain benefits if needed.
