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Health Insurance: What Is It?

In recent years, the cost, administration, and perceived value of health insurance for all Americans have garnered increasing attention. Broadly speaking, health insurance covers the cost of an insured person’s medical expenses. Recent legislation has made carrying health insurance mandatory for all persons with financial penalties for those failing to carry proper coverage. You may receive coverage as part of your employment package or you may have to purchase it openly on the health insurance market.

Outside of the United States, health insurance is often view as a right. In some locales, such as Canada and much of Europe, health care is covered by the state, much like public works and infrastructure costs. By contrast, the United States places the responsibility for health care coverage on the shoulders of the individual. As mentioned above, recent legistlation, commonly referred to as Obamacare, has mandated that all persons have health insurance, thereby spreading the cost across all persons and allowing access to all persons.

All of us will likely seek some medical attention in our lifetimes. Whether this is a remedy for a simple flu or a sophisticated treatment of a complex disease, access to proper care should be equally available to all persons. Health care is expensive and proper insurance allows the insured to seek the best and most appropriate providers without worrying about the cost.

In the United States, health coverage can be purchased from a variety of private companies or, depending upon your, be provided via public or government means. Examples of public coverage include both the Medicare program and the Veterans Health Administration program.

For the consumer, there is a variety of health plans available in the marketplace. It is critical to understand the differences of each and which plan best suits your needs. Like any financial investment, the more you know the better choice you make. Most health care insurance (not to be confused with long term care insurance) plans are managed care plans. These plans contract a network of health care providers and medical facilities to provide services at a low cost. Lower cost plans are typically more restrictive on doctor and facility choice while plans that are more flexible will cost more.

Indemnity Plans

Indemnity plans allow the insured to choose their doctor and services at well. After services, the doctor or facility submits a claim for reimbursement to the health insurance company. The amount of the reimbursement will be dictated by the benefit summaries outlined in the insurance plan. Most indemnity plans pay for 80% of services with the remaining 20% being the responsibility of the insured. Other restrictions and rules will apply. Indemnity plans may fit your needs, but be certain to understand all the fine print in the benefits summary so you will not be presented with unexpected costs.

Health Maintenance Organizations / HMO

Health maintenance organizations (HMOs) provide a select set of medical services for a set premium fee. You will have a primary care physician affiliated with the plan who coordinates your care and services. Services by other than your primary physician are typically restricted to other doctors or services in the plan’s network of providers. HMOs are popular due to their lower cost and, in most cases, the availability of broad range of services, including preventative care.

Preferred Provider Organization / PPOs

A preferred provider organization operates much like an indemnity plan. Under such a plan, you can choose any doctor and the plan works with health care providers, health professionals, and facilities to negotiate preferential prices. Copayments and deductibles typically apply within all PPOs. For many people, PPOs offer the empowerment of choice; you can choose your doctor and, more importantly, any specialists without a referral.

Health Savings Accounts

Health savings accounts are tax-free savings accounts designed to allow individuals to save money to cover future medical expenses. Eligibility is contingent on being enrolled in a high-deductible health insurance plan. These saving accounts are excellent ways for persons to sock away money in the event of a future medical emergency as well as to cover the basic out-of-pocket expenses you may incur under your health plan.

High deductible plans have lower premiums, but typically also have higher expenses if you need medical services. If you are relatively healthy, the HSA is an excellent way to gain a tax-advantage while building funds for eventual medical cost coverage. Additionally, funds in an HSA can cover certain medical expenses, such as hearing aids, that your health insurance plan on its own does not cover.

TWFG Services Health Insurance – compare and save

As is clear, health insurance is a complicated arena. Like any investment, it is important to understand what is available and what services best suit your immediate needs. Armed with the proper information you can make the best choice for your family’s well-being. Additionally, TWFG Services can provide other insurance services such as helping you determine your cost of long term care insurance, the best homeowners insurance for you, and getting you the lowest renters insurance quotes.