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- Managing Health Insurance Costs and Making Good Choices
Managing Health Insurance Costs and Making Good Choices
- By My Money Choice
- Published 01/9/2007
- Health Insurance
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Managing Health Insurance Costs and Making Good Choices
One of the most important financial decisions any person or family can make concerns health insurance. Should a medical crisis occur, not having insurance may lead to financial ruin. While this is fairly obvious, many people that have inadequate health insurance coverage may be left with financially devastating expenses if struck by serious illness. What sort of health insurance is a good choice? How do you know if you have adequate coverage or should consider purchasing additional health insurance coverage to prevent possible long-term financial consequences?
There are a few helpful things to understand about typical American health insurance policies, ranging from terminology to how the insurance provider interacts with the hospital. There are three primary types of insurance plans. The first is a fee-for-service plan. In this instance, the insurer typically pays a portion of medical expenses and the patient pays another portion. The next is a healthcare management organization, or HMO. The HMO provides extensive care, but at a higher cost and with limited choice. Finally, there are Preferred Provider Organizations, or PPOs. The PPO combines elements of both a fee-for-service and an HMO structure.
There are a few terms you should understand. A co-pay is the amount you pay at each doctor’s visit. Often, this is the only charge you will pay at the visit, and may vary from as little as five dollars to as much as fifty. Next, you should understand how deductibles work. Typically, after the deductible, a set amount you are required to cover out of pocket, is met, the insurance company pays a substantial percentage of all medical expenses, ranging from 70% to 100%. This percentage is called co-insurance. Some insurance providers also cap the amount you are required to pay annually, so if your medical expenses reach this amount, coverage will be 100% on all future expenses in that calendar year.
It is also helpful to understand that insurance companies and physicians agree upon payment amounts, and that your coinsurance payments will be related to these amounts. A bill for $45,000 that an uninsured individual sees might amount to only $15,000 for your insurer. While this does perhaps lend one to question the ethics of our health care system, it is a reality that makes high quality health insurance even more critical.
The majority of Americans acquire their health insurance through their employer’s group health plan. Occasionally, there will be no selection at all, but larger companies often offer a high and low plan option. Typically, group health coverage is fairly adequate. However, check to see if there is a maximum amount payable per year after deductibles are met, how high the deductibles are, and the co-insurance premium. If you have chronic and long-term health problems, an HMO or PPO will be a better financial choice, even with higher premium amounts.
If you do not have access to employer based group health insurance coverage, explore other group options. Labor unions, professional organizations and other groups sometimes offer health insurance coverage. This may be the most economical option if employer based coverage is not available. If all else fails seek out insurance coverage on your own.
Individual insurance coverage is available in all the forms listed above. However, it is often more expensive, and the cost may depend upon your own health status. If you are in good health, acquiring an individual policy will likely be quite easy, and fairly affordable. High insurance premiums are a significant financial problem, so choosing your own health coverage may require that you balance current expenses with needed coverage. It can be particularly important to look at spending caps and deductibles if you are choosing a PPO or fee-for-service plan. Regardless of the plan you choose, the expense of a monthly premium will easily be justified should an accident or serious illness impact your family.
Serious medical bills can be financially debilitating for a family that lacks health insurance or adequate health coverage. Choose your insurance carefully, and if you find your own health coverage lacking consider adding a supplemental policy, or finding another insurance provider and purchasing a more comprehensive insurance plan. It could save you from financial devastation.
There are a few helpful things to understand about typical American health insurance policies, ranging from terminology to how the insurance provider interacts with the hospital. There are three primary types of insurance plans. The first is a fee-for-service plan. In this instance, the insurer typically pays a portion of medical expenses and the patient pays another portion. The next is a healthcare management organization, or HMO. The HMO provides extensive care, but at a higher cost and with limited choice. Finally, there are Preferred Provider Organizations, or PPOs. The PPO combines elements of both a fee-for-service and an HMO structure.
There are a few terms you should understand. A co-pay is the amount you pay at each doctor’s visit. Often, this is the only charge you will pay at the visit, and may vary from as little as five dollars to as much as fifty. Next, you should understand how deductibles work. Typically, after the deductible, a set amount you are required to cover out of pocket, is met, the insurance company pays a substantial percentage of all medical expenses, ranging from 70% to 100%. This percentage is called co-insurance. Some insurance providers also cap the amount you are required to pay annually, so if your medical expenses reach this amount, coverage will be 100% on all future expenses in that calendar year.
It is also helpful to understand that insurance companies and physicians agree upon payment amounts, and that your coinsurance payments will be related to these amounts. A bill for $45,000 that an uninsured individual sees might amount to only $15,000 for your insurer. While this does perhaps lend one to question the ethics of our health care system, it is a reality that makes high quality health insurance even more critical.
The majority of Americans acquire their health insurance through their employer’s group health plan. Occasionally, there will be no selection at all, but larger companies often offer a high and low plan option. Typically, group health coverage is fairly adequate. However, check to see if there is a maximum amount payable per year after deductibles are met, how high the deductibles are, and the co-insurance premium. If you have chronic and long-term health problems, an HMO or PPO will be a better financial choice, even with higher premium amounts.
If you do not have access to employer based group health insurance coverage, explore other group options. Labor unions, professional organizations and other groups sometimes offer health insurance coverage. This may be the most economical option if employer based coverage is not available. If all else fails seek out insurance coverage on your own.
Individual insurance coverage is available in all the forms listed above. However, it is often more expensive, and the cost may depend upon your own health status. If you are in good health, acquiring an individual policy will likely be quite easy, and fairly affordable. High insurance premiums are a significant financial problem, so choosing your own health coverage may require that you balance current expenses with needed coverage. It can be particularly important to look at spending caps and deductibles if you are choosing a PPO or fee-for-service plan. Regardless of the plan you choose, the expense of a monthly premium will easily be justified should an accident or serious illness impact your family.
Serious medical bills can be financially debilitating for a family that lacks health insurance or adequate health coverage. Choose your insurance carefully, and if you find your own health coverage lacking consider adding a supplemental policy, or finding another insurance provider and purchasing a more comprehensive insurance plan. It could save you from financial devastation.