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Ten Things You Should Know about How Health Insurance Works

You probably understand many of the key concepts of health insurance, but you not know as much as you think.  Health insurance is a financial product, and like most other financial products, it is a complex instrument that has been developed over centuries.  The modern incarnation of health insurance is governed by both industry standards as well as state and federal regulations, making it both difficult to understand and beneficial in some surprising ways.

1. You can’t be denied a policy because you’re sick—Under the Affordable Care Act of 2010, the federal government made it illegal for insurance companies to refuse you a health policy because you are ill. Likewise, it is also illegal for them to offer you a policy at a higher price because you have a health condition.  However, they may adjust prices depending on your age and geographic location.

2. Insurers have to explain why they rejected a claim—If your insurer refuses to pay a claim, you are legally entitled to a reason why. If you still think that you should be reimbursed, you have the option of pursuing an internal appeal (through the insurance company) or an external review (an independent third party makes a judgment).

3. If you don’t get health insurance, you may have to pay a financial penalty—When Congress passed the Affordable Care Act of 2010, they included a component called the Individual Mandate.  This part of the law requires that all Americans with a certain amount of income must get covered or pay a penalty which in 2017 was $695 or 2.5 percent of your income, whichever is higher.

4. Health plans must include free preventive care—Many people don’t realize that their health insurance grants them many free preventive care services.  This includes

  • Blood pressure screening
  • Cholesterol screening
  • Diet counseling
  • Depression screening
  • Diabetes screening
  • Hepatitis B screening
  • Immunization vaccines
  • Lung cancer screening
  • STD counseling
  • Obesity screening and counseling

5. Avoid lapses in coverage—If you have insurance through your employer and leave your job, make sure to re-enroll in a health plan within 63 days.  That is the deadline to sign up for COBRA, the federally sponsored health plan extension that may provide coverage for an additional 18 to 36 months. This is also the maximum amount of time you have to enroll in a new health plan without having to divulge any health conditions; after this time period a new employer insurer has the right to inquire.

6. Don’t settle for your employer health plan—You may not realize it, but you don’t have to get coverage through your employer.  Closely examine the coverage terms to see if you are getting the most for your money.  If you are enrolled in a high deductible policy, you may have to pay thousands of dollars out of pocket before your insurer starts to kick.  If you are young and healthy you may find better options elsewhere, because group plans base premiums on the entire group’s health and age.

7. Deductibles in health plans don’t preempt benefits—Unlike your home or auto insurance policy where you must pay the deductible before enjoying any of the policy’s benefits, a health insurance policy may provide you some benefits even if you haven’t met your annual deductible limit.  These benefits may include discounts for prescription drugs, free annual checkups or preventive care services.

8. Low premiums may not mean low overall cost—Like most things, with health insurance, you are likely to get what you pay for.  If you want a low premium policy, you will probably have to pay in other ways including higher deductibles or other out-of-pocket expenses.  In the long run, if you encounter a major health crisis, or even a few minor ones, you may wish that you had gone with a plan with a higher premium that offered benefits. Take into consideration how often you and your family are likely to use medical services before you finally decide on a health plan.

9. You may use government subsidies to pay for health insurance—One of the most important features of the Affordable Care Act of 2010 was that it helped many Americans get enrolled in a health plan by helping to pay for monthly premiums. If your household makes between 100 percent and 400 percent of the federal poverty level, then you probably qualify for these ACA-sponsored subsidies. If you qualify, you may apply hundreds of dollars a month to your monthly premium, saving thousands of dollars annually. To use these subsidies, you must apply through one of the state or federal health insurance marketplaces and enroll in one of the plans available there. You must also verify your income by filing a tax return for any year are enrolled in a ACA plan.

10. Choose a network that suits your lifestyle—When you are shopping for a health plan, look closely at the three letters denoting the type of network.  These should be HMO, PPO, EPO, or POS. An HMO is the most restrictive, in that you can only see providers in your network, but these plans are usually the most cost effective.  A PPO plan allows you to see doctors out of network and has less limitations on what kind of doctors you may see, but these are often more expensive. EPO and POS plans are hybrids of HMO and PPO plans.

Health insurance, at its most basic, is simple to understand; you pay an insurer to help protect you from the financial consequences of a medical emergency.  However, there is often much more involved when you examine the finer points of your health plan.  If you would like to learn more about your current health insurance policy or would like to know what other health plans are available to you, you may find answers with one of the experienced insurance agents at Boost Health Insurance.

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