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Written by: Kiah Treece
Health insurance companies offer different levels of coverage that cater to diverse individual and family health needs. The best health insurance companies provide fast, flexible plans designed to fit various medical and financial circumstances. In this article, we’ll provide an overview of what health insurance is, how it works, and the best health insurance companies available so you can find the best coverage to fit your needs.
Health insurance is a type of coverage that pays for medical expenses incurred by an insured person and often their dependents. It is an agreement between you and your insurer, where you pay a monthly premium, and in exchange, the insurer covers part of your medical costs. This contract can cover a range of healthcare needs, from routine check-ups and preventive care to emergency room visits, surgeries, and long-term treatments.
Though no longer mandated by federal law, everyone needs health insurance. This coverage is a safety net for unexpected medical emergencies, which can be financially overwhelming without protection. Health insurance is especially critical for those with chronic conditions or who require frequent medical attention. Even healthy individuals benefit from health insurance as it covers preventive care like vaccinations, screenings, and regular check-ups, which are essential to maintaining good health.
Health insurance provides coverage for a variety of medical expenses, depending on the policy. However, there are several common costs that most health insurance plans cover to some degree:
While most of these services are at least partially covered, most insurance plans also require a certain amount of out-of-pocket costs for each. These may range from deductibles and co-pays to entirely out-of-pocket charges for services provided by out-of-network providers. Always review your specific policy to understand what is covered and what is not.
There are many different types of health insurance plans that vary by employer, state, and plan participant. When selecting health insurance, make sure you understand the different types of coverage available to choose a plan that best meets your specific needs.
Preferred provider organizations (PPOs) are a type of health insurance plan that offers both in-network and out-of-network coverage. In-network healthcare providers have a contractual agreement with the PPO to provide services at a reduced rate. While you’re free to see any healthcare providers, you’ll typically pay less if you use doctors, hospitals, and other healthcare providers in the plan’s network.
PPOs typically pay more of your medical costs if you get care within the network of providers. If you go outside the network, you might have to pay a larger percentage of the cost. For instance, a PPO might pay 80% of the cost of services provided by in-network healthcare providers and 60% of the cost for out-of-network providers.
PPOs are an excellent choice for individuals who value flexibility in their healthcare decisions and are willing to pay more for that freedom. If you want the option to see specialists without needing a referral, or if you frequently require care from providers who are not in a particular network, a PPO may be a good choice for you.
Health maintenance organizations (HMOs) provide comprehensive healthcare services to policyholders through a network of designated healthcare providers. Unlike PPOs, HMOs usually restrict coverage to care from doctors who work for or contract with the HMO. This often means you may have to live or work in its service area to be eligible for coverage.
HMOs generally won’t cover out-of-network care except in an emergency. Instead, they require you to choose a primary care physician (PCP) who coordinates all your health services and care. If you need specialized care or treatment that your PCP cannot provide, they will refer you to a specialist who is part of the HMO network.
HMOs are best suited for individuals who don’t mind limiting their choices to a network of providers and want to coordinate all their healthcare through a single primary care physician. They are more affordable, with lower premiums and out-of-pocket costs than PPOs, making them an excellent choice for those seeking to maximize their insurance coverage cost savings. However, there is a tradeoff of less flexibility compared to other plans.
Point-of-service (POS) plans are a type of health insurance that combines elements of both HMOs and PPOs. Like an HMO, policyholders choose a primary care physician within the network who coordinates their health care services. However, like a PPO, they also have the option to seek care outside of the network.
Under a POS plan, you need a referral from your primary care physician to see a specialist. If you choose to see a doctor outside of your plan’s network, you may have to pay the full cost of the services and then submit the bill to your insurance company for partial reimbursement. Using out-of-network services may also require you to reach a higher deductible.
POS plans are suitable for individuals who want some flexibility to see out-of-network providers but also desire the cost-saving benefits of having a primary care physician within a network. It may be beneficial for those who don’t mind the referral system for seeing specialists and can navigate the paperwork involved in getting reimbursed for out-of-network care.
Fee-for-service (FFS) plans, or indemnity health insurance, are a form of health coverage in which the insurer will pay a part of each service rendered to you based on their fee schedule. For example, if you visit a doctor, have a lab test, or stay in a hospital, the insurance company will pay a portion of the fees for these services.
In an FFS plan, you typically have the freedom to choose any doctor or hospital you wish without worrying about networks. After receiving the service, you or your healthcare provider will submit the expenses to the insurance company for reimbursement. There are usually deductibles to meet each year before the insurance begins to pay a percentage of your costs. After deductibles are met, FFS plans typically pay a percentage of the remaining charges for covered services, and you pay the rest.
This type of plan is typically more expensive than other forms of health insurance. It may be most beneficial to those who anticipate needing frequent medical services.
Health insurance allows insurance companies to share and pool risks among several policyholders. When you pay your monthly premium, this money goes into a pool used to cover all members’ medical costs. The risk of any individual incurring significant medical expenses is spread across the entire pool of insured individuals. This makes healthcare costs more manageable for everyone.
When you need medical treatment, your health insurance kicks in to cover a portion of the costs. The amount covered will depend on your specific plan and the nature of the services rendered. After receiving care, you’re typically responsible for a portion of the cost, known as co-pay, co-insurance, or deductible, depending on your plan.
That’s why, when choosing a health insurance plan, it’s crucial to consider the monthly premium, deductible, co-pays, and maximum out-of-pocket expenses. These factors will significantly affect your financial responsibility during the year, especially if you have a significant medical event or need ongoing treatment.
The cost of health insurance – typically structured as a monthly premium – can vary greatly and is influenced by several factors. These include:
Choosing the best health insurance company is a crucial decision you should base on a careful evaluation of providers. Here are a few essential factors to consider when selecting an insurance company:
A health insurance company’s reputation shows its customer service and reliability in meeting its obligations. A good reputation often indicates a high level of customer satisfaction and shows that the insurer is likely to handle claims fairly and quickly. Here are a few ways to check a company’s reputation:
Financial strength measures a health insurance company’s ability to meet its obligations. This metric reflects the insurer’s capacity to pay claims, especially for substantial amounts or in the event of a large claims volume. An insurance company with strong financial health will likely be more reliable and stable and less likely to experience financial difficulties.
You can check a health insurance company’s financial strength through ratings provided by independent financial rating agencies. These agencies, such as AM Best, Moody’s, Standard & Poor’s, and Fitch, assess the financial health of insurance companies and assign ratings based on their findings. Many of these ratings are public and you can access them for free.
Insurance coverage options can vary substantially from one company to another. These variations are important because the level and type of coverage directly affect your out-of-pocket expenses for healthcare services. If your insurance plan does not cover a necessary service or medication, you could end up paying the full cost yourself. Therefore, reviewing what each plan covers before deciding is essential.
Here are some things to look for when comparing health insurance company coverage options:
An insurance company’s network is the group of healthcare providers – doctors, hospitals, laboratories – with which the insurance company has agreements to provide medical services to their policyholders. Network restrictions directly affect your choices of healthcare providers and out-of-pocket costs and impact the quality of care you receive.
Seeing a provider outside your insurance plan’s network usually means higher out-of-pocket expenses, as insurance companies usually cover a lesser portion of the costs for out-of-network care. If you have a preferred doctor or specialist not in your plan’s network, you may have to switch providers or pay more to continue seeing them.
HMOs and EPOs tend to have stricter network restrictions, meaning you can only go to doctors and hospitals within the network for non-emergency care. On the other hand, PPOs provide more flexibility, allowing you to receive care from any healthcare provider, but offer lower out-of-pocket costs if you use providers within the network.
Several factors impact the cost of health insurance, including the extent of coverage, the size of the provider network, your age, location, and overall health status. The type of plan you choose can also affect the cost. Here are some costs to consider when comparing health insurance providers:
When comparing these costs, it’s essential to do so in the context of your broader health and financial situation. For example, if you expect to need frequent medical care, paying a higher premium for a plan with lower out-of-pocket costs may be worth paying a higher premium. However, if you are generally healthy and do not expect to need much medical care, a plan with a lower premium and higher out-of-pocket costs may be more cost-effective.
Policy limitations and exclusions are also important to consider when choosing a health insurance plan. These are conditions or circumstances under which the insurance company will not cover certain healthcare services, leaving you to bear the entire cost. Common limitations and exclusions include:
Consider your healthcare needs when reviewing these limitations. If you require a service that is commonly excluded, such as alternative therapies or specific prescription drugs, look for a plan that provides coverage for these treatments. Always ask questions if you need clarification on any aspect of a policy.
A health insurance company’s customer service can significantly influence your overall experience with a plan. Superior customer service can provide prompt and accurate responses to your queries, facilitate smooth claim handling, and assist in navigating your policy’s complexities. This ensures timely and efficient delivery of healthcare services.
Here are some things to consider when assessing a company’s customer service:
Getting health insurance can seem complicated, particularly if you don’t have access to an employer-sponsored health plan, but it doesn’t have to be. A clear understanding of the process can make navigating it much easier. Whether you’re getting insurance for the first time, changing your plan, or looking for coverage outside of an employer, here’s how to navigate the process:
The best health insurance company is the one that offers the best coverage option to meet your specific needs. Companies such as UnitedHealthcare, Blue Cross Blue Shield, and Aetna are known for providing wide-ranging coverage options and excellent customer service. However, you’ll need to research and compare different companies and plans to find the one that fits your circumstances.
Health insurance is expensive in large part due to the high cost of healthcare services. Health insurance companies must account for the uncertainty of the health status of their policyholders. This uncertainty leads insurance companies to set higher premiums to mitigate risks. Administrative costs, such as marketing, underwriting, and claims processing, also factor into the total cost of health insurance.
The exact dates for health insurance open enrollment vary. But, for most plans, open enrollment usually starts in early November and ends in mid-December. For employer-sponsored plans, the open enrollment period may differ and is typically communicated by the employer. If you miss this window, you can only enroll or make changes to your plan if you qualify for a Special Enrollment Period due to a life event like marriage, having a baby, or losing other health coverage.
The most popular type of health insurance is typically employer-sponsored insurance. These plans are one of the primary ways individuals obtain health coverage, mainly due to the shared cost structure where employers often pay a portion of the premium costs, making it more affordable for employees. Moreover, the insurance risk is spread over a larger group of individuals, which can further lower premiums.
Most standard health insurance plans do not include dental coverage, instead treating it as an extra benefit that you can add for an additional cost. However, some health insurance policies may cover preventive dental care or certain procedures deemed medically necessary. For comprehensive dental coverage, many people opt for separate dental insurance plans.
As of 2019, there is no longer a federal mandate to carry health insurance in the United States. That said, some states have implemented their own mandates, so residents in those states may still face a penalty for not carrying coverage. However, even if it’s not required, health insurance is highly recommended as it protects you from high medical costs and provides access to necessary healthcare services.
The Premium Tax Credit is a refundable tax credit in the United States designed to help eligible individuals and families with low or moderate income afford health insurance purchased through the Health Insurance Marketplace. To qualify for the credit, you must meet certain requirements. Your premium tax credit amount is based on a sliding scale, depending on your income. If your income is near the lower end of the scale, you’ll qualify for a larger credit. Conversely, if your income is near the upper end of the scale, you’ll qualify for a smaller credit.