The Basic Guide to Health Insurance

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Health insurance is a product that’s designed to cover your medical expenses. Just like auto insurance provide coverage for your car in case there is an accident, health insurance provides you coverage if you get injured or sick. The best part about health insurance is that it also includes preventative care i.e. tests and visits to the doctor before you get sick. However, you should know that health insurance will not cover 100% of your medical costs. Instead, it will share costs up until a certain point, which is known as out-of-pocket limit. After you have hit this limit, the remaining healthcare costs will be 100% covered by health insurance.

There are several ways in which healthcare companies share costs. These are the features of your health insurance plan and you need to be aware of them, such as copayment, deductible, your out-of-pocket limit and coinsurance. If the health insurance plan is on a government-run health insurance exchange, it will have some affordability standards, but the same may not apply to off-exchange plans. Nonetheless, both of these will provide essential health benefits.

Who should buy health insurance?

There is a common misconception that health insurance is only for the sick. The fact is that everyone should buy health insurance as it is mandatory, unless you can qualify for a hardship exemption. Some people prefer to handle the medical expenses instead of taking out an expensive health insurance policy they believe they don’t need. But, you should be aware that health insurance is a lot cheaper than the tax penalty applicable on those without health insurance. Moreover, the out-of-pocket expense to be paid in the case of a medical emergency is a lot more than the tax penalty. As a matter of fact, medical bills are the leading cause of debt and financial problems, such as home foreclosure and bankruptcy.

Essential benefits every plan should have

Also known as Obamacare, the Affordable Care Act has made it compulsory to provide certain health services in all plans that are offered to consumers. These required services are referred to as ten essential benefits and they are:

  • Emergency services
  • Pregnancy, newborn care and maternity
  • Ambulatory patient services (outpatient care that can be provided without admitting in the hospital)
  • Laboratory services
  • Hospitalization for surgeries, other conditions and overnight stays
  • Pediatric services, including vision and dental coverage for children
  • Substance abuse disorder and mental health services
  • Wellness and preventative services and also chronic disease management
  • Habilitative and rehabilitative services and devices (treatment and devices that assist people in recovering or gaining physical and mental skills after a disability, injury or onset of a chronic condition)
  • Prescription drugs

It should be noted that these categories and the services provided under them may vary from state to state. Typically, healthcare plans are required to offer more services to their clients in most states instead of restricting them to services under these categories.

It is better to be safe than sorry and sign up for a suitable health insurance plan.