Like everything these days, the cost of medical care is high and, for some people, unaffordable. Many folks, especially those who are still young, are reluctant to buy health insurance becasue they want to keep their monthly bills down. While they know it is important to have and understand the its value, they put off taking out a policy till they are older.
Why You Need Health Insurance
Not having health insurance can be a recipe for disaster. The government does not provide any healthcare benefits, and there is no universal healthcare. So if you need any medical services, you’ll need to fund it yourself.
While young people may be healthy and less likely to fall ill, accidents and injuries can happen at any time, and a trip to the hospital, medication, and medical tests can deplete your savings and derail your financial goals.
Having health insurance can prevent you from getting sick by providing access to vaccines. Your policy may also include screenings and check-ups so that you can detect symptoms of diseases and illnesses early. This allows you to treat the condition early and prevent it from spreading and becoming more severe.
Cost of Health Insurance
The cost of health insurance premiums varies greatly, depending on several factors. Many employers sponsor the health insurance of their employees. Some companies may cover 100% of their employees’ premiums, while others offer partial cover. For example, the company will contribute 80%, and the employee will have to pay 20%. Others may offer a 50-50 split between the company and employees.
However, according to the Affordable Care Act, two things that do not influence the premium prices are the policyholder’s gender and any pre-existing medical conditions they may have.
The factors that do influence your premiums include:
● Age
The older you are, your more expensive your health insurance premiums. This is because you’re more likely to develop diseases as you get older.
● Where you live
The state and federal laws differ, and each has different laws regarding how much premiums should be and what they must cover.
● Income level
In some cases, health insurance is subsidized for low-wage workers, but the premiums may be higher if they are insured through their employer.
● Company size
The premiums might be lower if you’re employed at a big company. This is because companies that sponsor their employee’s health insurance may qualify for a reduced rate based on how many employees they need to cover.
● Community type
Insurance is more expensive in rural areas than in bigger cities. This is largely because fewer healthcare workers in rural areas make it less competitive.
● Type of plan
Several different health insurance plans offer various benefits, and the prices vary depending on what is covered. The price is also affected by whether you are on your employer’s group plan or if you’ve purchased a policy as an individual.
● Lifestyle
In some cases, smokers may pay higher premiums than non-smokers since smoking is considered a person’s choice that does have a huge impact on overall health.
What do Health Insurance Policies Cover
Prior to the Affordable Care Act, health insurance plans varied greatly. Some plans didn’t cover basic medical needs, and it was incredibly confusing for consumers to know what they were covered for. While you can still shop for a plan that suits your and your family’s medical needs, the Affordable Care Act listed several essential health benefits that all health insurance plans must cover. These essentials include:
- Maternity cover and newborn care
- Hospitalization costs
- Emergency services
- Lab tests
- Outpatient care includes doctors and other healthcare services that are treated out of a hospital
- Pediatric care
- Prescription medication
- Preventive care like vaccines and immunizations
- Medication and treatment for chronic conditions
- Rehab services and treatment for substance abuse
- Mental health treatment
While plans vary, expect most plans not to cover the following:
- Cosmetic procedures
- Elective surgery
- Adult dental care
- Infertility treatment
- Alternative therapies
Types of Health Insurance
Health insurance can be divided into two major types – public and private. Public health insurance is not free but is subsidized by the government. Private health insurance is not funded by the government but can be sponsored by your employer. Both public and private health insurance can be further broken down into different types.
Public Health Insurance
Public health insurance is more affordable and is designed to allow people to receive medical care at a reduced cost. There are three types of public health insurance, namely:
Medicare
Medicare is designed for people who are sixty-five years old and above. Within Medicare, there are different policies available to suit the patient’s individual needs.
Medicaid
Medicaid is targeted at people who are from low-income backgrounds and who cannot afford expensive premiums. Medicaid provides medical care at a low cost for these people, as well as long-term care.
CHIP
The Children’s Health Insurance Program is similar to Medicaid. This policy aims to provide affordable healthcare to children under eighteen from low-income communities.
Private Health Insurance
All health insurance not funded by the government is considered private. Most people take health insurance policies through their employers. There are four main types:
HMO
The Health Maintenance organization is usually the cheapest plan that offers the least flexibility. Under this plan, you are limited to specific hospitals, clinics, and doctors that you can use to get a reduced rate or to be covered by the plan. If you need to see a specialist, you will need to be referred by your primary care provider first.
PPO
With the Preferred Provider Organization, you are not limited to specific doctors and hospitals and do not have to have a primary care provider. However, if you use a healthcare provider in the network, you can qualify for lower costs. The cost will be higher if you choose to receive treatment from a healthcare provider not part of the network.
EPO
The Exclusive Provider Organization allows you to visit any healthcare provider within the network, including specialists, without needing to be referred but won’t cover healthcare providers out of the network.
POS
The Point of Service plan allows you to access healthcare providers in and out of the network. However, if you choose a provider within the network, you pay a reduced rate. Under this plan, you will need a referral before seeing a specialist.
