A Beginner’s Guide to Understanding Health Insurance
In 2022, a record 13.6 million people enrolled in health insurance coverage. Most consumers understand that health insurance helps pay for medical expenses in exchange for monthly payments.
However, many fail when it comes to understanding health insurance benefits and how the system works.
This can result in overpaying for coverage or not obtaining enough coverage. Read on to learn the basics of how health insurance works.
Where Can You Get Health Insurance Benefits?
The first part of understanding the answer to, ‘how does health insurance work,’ is learning where you can get it. You can get coverage from multiple sources and you can have more than one health insurance policy at a time.
One common method of obtaining coverage is from your employer as part of your compensation package. You can also get it through the private health insurance marketplace.
Health Insurance From Your Employer
Employer-offered plans are often more affordable than private plans. This is because your employer receives a bulk discount on these plans.
Monthly premiums often come out of your regular paycheck, which means one less payment to remember. However, these plans limit your freedom to choose the plan, insurer, and (sometimes) provider you want.
Private Health Insurance
If an employer-offered insurance plan isn’t an option or you want something different, you must turn to the private marketplace. While you have more choices, these plans cost more than those offered by employers.
Understanding Health Insurance Policy Types
Once you find the right insurer, the next step in understanding how health insurance works is understanding the different types of policies. Some of the most common are listed below.
- Health maintenance organization (HMO)
- Preferred provider organization (PPO)
- Exclusive provider organization (EPO)
- Point of service plan (POS)
Each plan differs in whether you must stay in-network when receiving care, whether procedures and specialists require referrals, and cost.
Understanding Health Insurance Terms
You can’t understand a health insurance policy without learning certain health insurance terms. Your premium, co-pay, and deductible are all out-of-pocket expenses. This means you’re responsible for these costs.
Your premium is your monthly payment for coverage. Your deductible is the amount you need to pay in health insurance claims before your insurance provider starts contributing to your bills.
Finding the Right Health Insurance Policy
Compare plans to find the health insurance policy that meets your needs. Consider how much you can afford in premiums vs how beneficial the plan is. Providers like Insurance Tales can help you find the right policy.
Premiums vs. Coverage
Low monthly premiums mean higher deductibles (and vice-versa). While this is appealing to those on a tight budget, these aren’t the best plans to choose.
These plans make it difficult to reach your deductible, which means you won’t ever tap into your plan’s full potential. Find a balance between premiums and deductibles that benefits you most.
Get Your Policy
Understanding health insurance and how it works are key in finding a health insurance policy that meets your needs. Learn the terms, study the benefits, and find a balance between premiums and deductibles for the best results.
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