How Health Insurance Works

How Health Insurance Works

insurance tips

How Health Insurance Works

A health insurance is supposed to protect your entire life’s savings from devastating medical costs in times of major accidents or chronic disease. People earns their living by doing hard work and they do like to save some money thinking about the future old times. But accidents never come calling. A major accident can ruin you financially as medical expenses are expensive. So people keep a health insurance as well as can stay safe in the meantime. But how do a health insurance work? Why is a health insurance very expensive? And the most common one is why do I need a health insurance? Before you start a plan you need to learn about their requirements and pre-authorization. Otherwise, you’ll not get a good health insurance for urgent needs. Unlike other insurance health insurance helps you receive healthcare whenever you need.

Today I am going to talk about How Health Insurance Works and how can this help you to stay safe from argent medical expenses. Let’s get started.

Monthly Premiums

You need to pay a monthly premium for your insurance plan. If you never claim anything from your insurance you still need to give a monthly premium. This monthly premiums provides cash flow which helps the insurance companies to bear their day-to-day expenses. Month premiums depend on your healthcare plan. You can look for health plans on the internet.

The Deductible

You pay deductible before your health plan pays a dime for your medical expenses. After paying a deductible your health plan starts working. The deductible starts from $500 to $10,000. After you pay your deductible your plan will start paying your expenses. If you don’t your plan will not start.

Co-payment

Co-payments are another thing that you will meet if you have a health insurance plan. A typical copay is $20 for a doctor visit, $50 for a hospital visit and $10 to $40 for each prescription. You pay 100 percent for the visit until the deductible is met. Some plans don’t have any co-payment. But this payments are fixed.

Coinsurance

Coinsurance means a percentage you need to pay for your medical expenses such as medical cost, surgery cost etc. Well, you have to pay 100% of your bills until you meet up your deductible. After you meet up your deductible you pay 20% of your healthcare fees & your healthcare plan pays 80% of your cost. Short term health insurance plans do not offer this type of coinsurance.

Network

A health insurance needs to create a network for providing healthcare service. A health insurance covers your healthcare expenses in urgent times and lets you worry about recovering only. The surgeon, medical institution, pharmaceuticals and healthcare service providers signs a contract with the health insurance companies. This makes a value chain in the health insurance industry and the healthcare providers make a network. You need to receive healthcare from this network.

A health insurance plan will make you receive treatment from an in network primary physician. This physician will decide in times of serious injury & tell you to receive healthcare from any in-network physician. If you think that you will go to any other doctor than you can do so. But your plan won’t pay for that. This are out of pocket cost.

Some plans offer you to receive medicine from any pharmacies you want. But some plans don’t. Sometimes they want you to take medicine from a specific pharmaceutical. As I have told you earlier your out of pocket cost is all on your own. Your insurance plan will not pay for your out of pocket cost. You may buy medicine with your money. The cost may be more than your insurance plan offers you. But it’s on your own. Anyhow, before making a contract with your health insurance company make sure you understand your plans.

Health Insurance Plans

Health insurance plans are different on their own. They offer different facilities for you. There are 6 types of health insurance plan. You can learn about them on the internet. We are going to learn about their names in this article.

  1. Preferred Provider Organization (PPO)
  2. Health Maintenance Organization (HMO)
  3. Health Savings Account (HSA)
  4. Point of Service (POS)
  5. Exclusive Provider Organization (EPO) 
  6. Indemnity Plan
  7. Flexible Spending Account (FSA)

This plans have different values. Try to learn about them before you choose a plan.

Some Final Thoughts

A health insurance plan helps you in urgent times. Think about your family as well as others. What will they do in urgent times? A health insurance depends on its value chain. Besides this a health insurance depends on its in network providers. If you still have doubt in your mind about keeping a health insurance than read the post again. A health insurance is must for you if you have fear of financial ruin.

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