If you’re healthy, you might think health insurance isn’t necessary. But we’ve got a few reasons for you to reconsider

When you think about the importance of health insurance, your mind often goes to extreme cases and certainly, you would be correct. insurance is critical in the case of a serious injury or illness. Fixing a broken leg can cost $7,500 (US) and a three-day hospital stay can run you $30,000 (US). The price only climbs for more serious illnesses such as Cancer Care which can often total hundreds of thousands of dollars.

High medical bills are the top reason why Americans consider taking money out of retirement or filing for bankruptcy. Avoiding that sort of financial risk is reason enough to make sure you have adequate health coverage, but it’s only a part of the story.

However before we delve deeper into the Importance of Health Insurance, Let us try to better understand the ins and outs, jargon, and more. Then learn more about options to consider and ways to navigate the system exactly as Health insurance is tricky in more ways than one.

What is Health Insurance?

Health insurance is a type of insurance that helps cover the cost of an insured person’s medical and surgical expenses. There are different types of health insurance in the USA.

Insurers use the term “provider” to describe a clinic, hospital, doctor, laboratory, healthcare practitioner, or pharmacy that provides treatment for an individual’s condition.

The “insured” is the owner of the health insurance policy or the person with the health insurance coverage

Depending on the type of health insurance coverage a person has, either the insured pays costs out of pocket and receives reimbursement, or the insurer makes payments directly to the provider.

In countries without universal healthcare coverage, such as the United States, health insurance is commonly included in employer benefit packages.

History

Following the introduction of the Affordable Care Act in 2010, the number of people without insurance fell by over 20 million to reach the lowest-ever level in 2016, according to the Kaiser Family Foundation (KFF).

However, from 2017, the number of adults without insurance rose again by 2.2 million, from 26.7 million in 2016 to 28.9 million in 2019. Between 2016 and 2019, the percentage of people without insurance rose from 10% to 10.9%. However, the rate of people with health insurance is still higher than it was before the introduction of the Affordable Care Act.

A 2012 report from the Commonwealth Fund states that one-quarter of all U.S. citizens of working age have experienced a gap in health insurance coverage. Many people in the survey lost their health insurance when they became unemployed or changed jobs.

The KFF adds that Black people and those with low incomes are more likely to have no insurance than other groups.

Types of Health Insurance

There are two main types of health insurance: private and public, or government. There are also a few other, more specific types. The following sections will look at each of these in more detail.

Private health insurance

The Centers for Disease Control and Prevention (CDC) says that the U.S. healthcare system relies heavily on private health insurance. In the National Health Interview Survey, researchers found that 63.7%Trusted Source of people under the age of 65 years in the U.S. have a type of private health insurance coverage.

Public, or government, health insurance

With this type of insurance, the state subsidizes healthcare in exchange for a premium. Medicare, Medicaid, the Veterans Health Administration, and the Indian Health Service are examples of public health insurance in the U.S.

Other types

Some people may also define an insurer by the way it administers its plans and connects with providers. Here are some examples of the types of plans available.

Managed care plans

With this type of plan, the insurer will have contracts with a network of providers to provide lower-cost medical care to its policyholders. There will be penalties and additional costs added to out-of-network hospitals and clinics, but they will provide some treatment. The more expensive the policy, the more flexible it is likely to be with the network of hospitals.

Indemnity, or Fee-for-Service, plans

A Fee-for-Service plan covers treatment equally among all providers, allowing the insured to choose their preferred place of treatment. The insurer will typically pay 80% of costs on an indemnity plan, while the individual pays the remaining costs as a coinsurance.

Health Maintenance Organization plans

These are organizations that provide medical care directly to the insured. The policy will usually have a dedicated primary care physician who will coordinate all necessary care.

Health Maintenance Organization (HMO) plans will usually only fund treatment referred by a family doctor and will have negotiated fees for each medical service to minimize costs. This is usually the cheapest type of plan.

Preferred Provider Organization plans

A Preferred Provider Organization (PPO) plan is similar to an indemnity plan in that it allows the insured to visit any doctor they prefer. The PPO plan also has a network of approved providers with which it has negotiated costs.

The insurer will pay less for treatment with out-of-network providers. However, people with a PPO plan can self-refer to specialists without having to visit a primary care physician.

Point-of-Service plans

A Point-of-Service plan functions as a combination of an HMO plan and a PPO plan. The insured can choose between coordinating all treatment through a primary care physician, receiving treatment within the insurer’s provider network, and using non-network providers. The type of plan they have will dictate the progress of treatment.

Why The Type Of Insurance Plan Is Important

The type of plan a person has dictates how they will approach getting the treatment they need and how much money they will need to pay on the day they receive it.

In 2003, the U.S. Congress introduced a new option: the Health Savings Account (HSA). It is a combination of an HMO plan, a PPO plan, an indemnity plan, and a savings account with tax benefits. However, in plan year 2020, a policyholder must pair this type with an existing health plan that has a deductible of over $1,400 for individuals or $2,800 for families.

HSAs can top up coverage, extending existing plans to cover a wider range of treatments. If an employer pays for an HSA on behalf of their employees, the payments are tax-free. An individual can build up funds in the HSA while they are healthy and save for instances of poor health later in life.

However, people with chronic conditions, such as diabetes, might not be able to save a large amount in their HSA, as they regularly have to pay high medical costs for the management of their health concerns.

These plans often carry very high deductibles, meaning that although premiums can be lower, people often end up paying the full expenses of any required medical treatment.

There is more overlap as plan types evolve. The distinctions between policy types are becoming more and more blurred.

The majority of indemnity plans use managed care techniques to control costs and ensure that there are enough resources to pay for appropriate care. Similarly, many managed care plans have adopted some characteristics of Fee-for-Service plans.

Legislation

In the U.S., having some degree of insurance is legally necessary as part of the Affordable Care Act. A person without health insurance has to pay a fine.

However, policymakers removed the Individual Mandate in the Affordable Care Act from the legislation in 2019. Insurance is no longer an individual legal requirement in the U.S.

If the policy also covers the children in the family, a person is allowed to be on their parent’s insurance until the age of 26 years, even if they are:

• married
• living away from home
• not financially dependent on their parents
• eligible to be included in their employer’s coverage
• Insurance is regulated at the state level, meaning that buying a policy in one state is different from doing so in another.

Although state legislation can affect the price of a policy, the important decisions about a person’s coverage and reimbursements rest with the insurer. People should be sure to have their broker or customer services representative discuss the impact of any changing legislation on their particular policy.

What will an insurer need to confirm coverage?

Whether you are making contact before treatment or sending in a claim for repayment after having finished, your insurer will need various pieces of information about your treatment.

These may vary from insurer to insurer, but they will standardly include:

• exactly what procedures, diagnostic tests, or consultations were carried out
• an itemized invoice, so the claims team can exclude ineligible treatments without affecting those included within the policy
• the reason for treatment or the nature of the illness or condition
• the name of the doctor and facility
• the country or state of treatment
• the date of treatment or each appointment if claims are for a full course of treatment, such as psychotherapy
• for inpatient treatment, a doctor’s letter confirming the reason admission is clinically necessary and the requested length of stay

Failing to provide this information will usually result in a delayed or incorrectly rejected claim. Be sure to request all necessary information while you are at the facility.

Exclusions

Insurance companies will refuse to fund treatment that does not align with the agreed policy. There are many reasons that this can happen. Specific reasons depend on the terms of an individual’s policy, but common reasons for the rejection of a claim include:

• Treatment was received for an underwritten or previously undisclosed pre-existing condition.
• The doctor was not an appropriate type of physician to treat the named condition.
• Aesthetic or cosmetic treatment was received for non-medical reasons.
• The benefit of permitted funds for a particular treatment had been used up for the coverage period by the time treatment was received.
• Preventive care was received, such as a full checkup, on a policy that only covers active treatment or the treatment of diseases and conditions.
• A person has tried to purchase devices or physical aids, such as orthotic in-soles for foot problems, on a policy that does not cover these.
• An individual receives treatment during a break in cover.
• The claim was for administrative costs, such as the printing of medical reports.
• The insured claimed for contraception or family planning, and these are generally not covered.

An insurer will not cover treatment if an individual receives it for a condition that is under a moratorium. Moratorium refers to a particular period during which an insurer will not fund treatment for a condition. However, after the closing date of the moratorium period, the insurer can add the condition to the policy.

For example, some policies may include a moratorium on maternity care in the first 10 months to prevent people from buying a policy when expecting a child and immediately making a huge claim and then canceling. During this time, maternity visits or the inpatient delivery of an infant will not be funded. However, after 10 months, the insurer will pay for these treatments.

In some cases, a claim will only be partly paid if the provider of treatment charged more than was reasonable and customary in that area. If an osteopath in a certain area would normally charge $100 for a consultation, and a patient submits an invoice for $180, the insurer will often only pay up to the reasonable and customary fee.

This can often be avoided by staying within the provider network, where set fees will have been agreed upon.

Often, an insurer will pay the parts of the claim that are eligible for coverage and exclude parts that would not fit under the policy. This is known as a shortfall.

Choosing a policy

An insurance broker or intermediary can help you better understand your coverage needs and buy a policy that matches them.

An insurance broker or intermediary can help you better understand your coverage needs and buy a policy that matches them. With all of these options available, it can seem overwhelming to choose a policy that is right for you and your family. When coverage is available through an employer, it can be a great way to access an often-enhanced set of benefits at a reduced cost. However, not all employers offer health insurance as a perk.

There are some important factors to bear in mind when choosing a policy.

These include:

• Whether to collect all members of the family into one plan or have each member on a separate plan
• Your current doctor being in the network for a particular insurer
• Making sure the options you choose in the policy are right for your health needs
• The size of your deductible and whether you would prefer to pay more as a regular premium or more when treatment is necessary
• The amount of time spent outside the country – if you travel for many months of the year, you may benefit from a policy that covers more than just your country of residence

You may wish to get an insurance policy through a broker or intermediary. While their services may cost a little extra on top of your premium, they can provide a clearer breakdown of the available options and how they will impact you and your family and make sure you get the fairest deal.

Now that we understand health insurance a bit better let us find out why it is much more important than we think

Health Insurance Makes Treatment Less Expensive

When you purchase health insurance, you start benefiting immediately. Even if your plan has a deductible, you will pay significantly less for office visits than you would without insurance. Some plans also offer reduced-price generic drugs and free disease management programs. Plus, having health coverage can put you in a better position to prevent or spot difficult — and often costly — illnesses early on.

You May Qualify for Financial Help — and Avoid Penalties

Since 2020, a state mandate requires that Californians have health insurance. Californians who fail to do so, and do not qualify for an exemption, will be charged a minimum of $900 for each adult and $450 per dependent under the age of 18 that is not covered. These amounts are for tax year 2023 and may vary from year to year. The good news is that financial help can reduce the costs of health insurance for more people than ever before. To see if you qualify, check out Covered California’s interactive calculator.

Peace of Mind

All health insurance plans through Covered California cover essential health benefits, including laboratory services, prescription drugs, hospitalization, maternity and newborn care, mental and behavioral health, emergency services, and more.

No matter how young or healthy you are, no one is immune to accidents. Staying covered allows you to do the activities you love without the stress of a possible injury — and the associated cost — weighing on your mind.

Between the penalty for not having health insurance paired with the risk of notoriously high unexpected medical expenses, not having coverage puts you and your family at more of a financial disadvantage than signing up for health insurance ever could. Make sure you don’t go without coverage to protect your health and your financial future too.