How to Pick Your Health Insurance Plan
Going without health insurance is risky. What if you get injured and require surgery? The cost of a hospital stay can be as much as $400 a day. Or what if you or your significant other becomes pregnant? Even through a clinic, the price of prenatal care and delivery can exceed $5,000 today.
Insurance is designed to help you in these situations — to assume the risk of paying your medical bills — for a fee, of course. If you have to pay for your own health insurance, you know it isn’t cheap. But one major medical expense can make one or two or even 10 years’ worth of premiums pay for themselves.
Many people get their health insurance from their job. Health insurance first became an employee benefit in the United States during World War II. “Many companies found that offering health care coverage was an effective way to attract scarce workers without violating the wartime freeze on salaries,” said Kathleen Sebelius, insurance commissioner for the state of Kansas. “After the war, full health care coverage soon became an expected benefit of big-business jobs.”
Today, full health care coverage, for the most part, remains the domain of large businesses, with an estimated 41 million Americans still going without. According to the Washington Insurance Council, data from a 1991 survey of 3,322 firms show that only 40 percent of employers offer health coverage — although their employees account for 77 percent of the work force in this country.
Many small employers cannot afford to offer health insurance to their workers. And plenty of mid-size and even large firms can do so only if the employees pay part of the cost.
Still, if you already have at least some health coverage through your employer, you’re in pretty good shape — even if you have to pay part of the price. You also may have the option of paying those costs with pre-tax dollars, which reduces your taxable income for the year and shrinks the bite Uncle Sam takes out of your paycheck. Sometimes, the tax benefits wind up making your health insurance virtually free — for you, anyway.
When it comes to health insurance these days, you have a choice: Do you want to join a health maintenance organization (HMO), a preferred provider organization (PPO)? Or do you want to pay more and get a reimbursement-style policy (Medical Expense plan) so that the insurance pays you back for a percentage of your costs, after you meet the deductible?
If you’re searching for your own coverage, there is a tremendous variety of policies available in today’s health insurance market. Some contain a single coverage (for example, hospitalization coverage only) or a combination of the major types of health insurance. Even if you’re just choosing among the two or three plans offered by your insurance company or your employer, this chapter will cover what you need to know to choose the plan that’s right for you — and your family. Many of the health insurance companies here on Health Insurance Online offer a variety of health insurance plans for you to choose from. Each health insurance plan has differing premium amounts, co-pay amounts, coverage levels and so on, and many of them can be custom tailored to suit the individual needs of you or your family. The most popular types of these plans include:
Health Maintenance Organization Plans (HMO Plans)
HMO plans are the most popular type of health insurance plans available. Their combination of low premium cost and low co-pay cost make them attractive to a wide range of individuals and families. However, HMO’s lack the freedom found in other plans, due to needing to go through a primary care physician before seeing a specialist, if needed.
Preferred Provider Organization Plans (PPO Plans)
PPO plans also offer significant savings on health care costs in comparison to being uninsured, but unlike HMO plans, PPO plans don’t require you to see primary care physician before seeing a specialist. However, this freedom comes at a price, meaning that PPO plans are usually more expensive than HMO plans.
Health Savings Accounts (HSA)
Health Savings Accounts, or HSA’s, are usually coupled with high deductible health plans, described below. HSA’s allow individuals to deposit non-taxed money into an account that may accumulate and grow year after year if not used. The money in these accounts can then be used pay for qualified medical expenses.
Point of Service Plans (POS Plans)
A Point of Service insurance plan gives you a limited amount of choice in terms of doctors and specialists in return for lower priced premiums and co-pays. When you’re in a POS plan, you choose only your primary care physician from within the health insurance company’s network, and if you need to see a specialist outside of the network, the company might only offer some financial coverage.
High Deductible Health Plans
High deductible health plans offer lower premiums than some other plans. However, as their title suggests, their deductibles are much higher than other health insurance plans, the deductibles for these plans are very high, meaning you will pay more in out-of-pocket costs if you do require medical attention.