Health Insurance Buyer's Guide

There is nothing in this world that is truer than the old adage – ‘health is wealth’. Our health is primarily our responsibility for numerous reasons. We all have loved ones that depend on us. To fulfill our responsibility of looking after them, we need to be in good health ourselves. In order to maintain good health and to counter any unforeseen medical expenses, health insurance ought to be your first step towards fulfilling your responsibilities. We need to make a smart health insurance decision because of the protection that it offers us.

Why You Need Health Insurance

The most important reason is to protect your finances. Medical treatment and bills are, for the most part, unaffordable for a majority of the population. Health insurance entitles you to discounted rates, a factor that insurance companies negotiate with your health care provider. Moreover, health insurance gives you easy access to a vast network of health providers, which results in you maintaining better health. Regular checkups ensure that you lead a healthier lifestyle rather than one of neglect. Any life-threatening condition that you may unexpectedly encounter, will entitle you to treatment without having to pay anything upfront. With monthly premiums ranging for $50 – $150, individual and family health insurance is affordable.

Understanding Health Insurance

Prior to signing up for any policy, it is essential that you understand the terms and conditions of the coverage, and of course, health insurance terminology. To begin with, there are four types of plans for individuals as well as families.

1. Indemnity
An indemnity plan gives you the option of visiting any hospital or doctor of your choice. The insurance company will pay a portion of your total bill. However, you may need to pay an advance towards some services and can apply for a reimbursement from your health insurance provider, later. This type of plan is generally more expensive, and will suit you if you want to the preference to choose doctors, and have the ability to pay upfront, if necessary.

2. Preferred Provider Organization or PPO
This plan covers medical care by a list of health care providers enlisted with the insurance company. PPO is the most popular plan and is ideal if your doctor is part of this plan. However, it is important to check the list of providers prior to seeking medical care.

3. Health Maintenance Organization or HMO
An HMO plan entitles you to seek medical care from a list of providers that contract with or agree to provide medical services to those covered by this policy. You can choose a primary care physician for most of your health care needs, who in turn may refer you to HMO specialists if necessary. Choose this plan if you agree to have your primary care physician coordinate your treatment with HMOs.

4. Health Savings Account or HSA plans
This plan involves opening a special bank account where you can deposit money to be used for future medical expenses, and save money. You earn interest on the deposit and save on taxes too. This account is similar to a 401(k) account and is normally a PPO plan with higher deductibles. HSA plans are ideal for younger individuals or if you prefer lesser premiums with higher deductibles in case of any unexpected illness or injury.

Insurance Terminology

• Premium - A premium is a pre-determined sum that you need to pay your health insurance company on a monthly basis. Premiums depend on a number of factors that include your age, present health condition etc. Premiums are generally lower for younger individuals and increase with age. To save money, choose a lower premium with higher deductibles.

• Copayment - Copayment is a fee you may need to pay upfront when you visit a provider or purchase a branded prescription drug. Your insurance provider will pay the balance amount.

• Deductible - Deductibles are your out-of-pocket expenses that you need to pay prior to the insurance company paying for any medical claims. Deductibles do not include premiums and copayments. To maintain a reasonable level, make sure your deductibles are less than 5% of your annual income.

• Coinsurance - Coinsurance is the balance amount you are required to pay after any deductibles.

Whatever plan you choose normally cover medical care which includes physician expenses, hospital expenses, surgical expenses, preventive care, prescriptions, maternity, emergency room services, pathology lab reports, emergency room services and more. Always make sure you check with your health insurance provider for the extent of your coverage.

Assess Your Need for Health Insurance

According to your financial status, you ought to set a budget that will take care of your health care insurance needs. Another factor that needs to be considered is the benefits that you actually need. If you find it hard to save regularly then it is advisable to opt for a plan with lower monthly premiums. If you are relatively healthy and haven’t had the need for treatment for a while, you can look for lesser coverage for preventive care. The same is the case if you haven’t spent much on prescription drugs either. Some pre-existing medical conditions may not qualify you for coverage with some insurance companies. Therefore, it is essential to talk to a licensed agent and discuss this prior to signing up for a policy.

Buying Individual Health Insurance Online

Insurance companies offer instant quotes online. It is important that you compare quotes and even consult experienced insurance agents in order to choose the right policy that suits your needs. Since most companies have online customer service support or toll free number, make sure you get answers to all the questions you have. You may even receive a discount for purchasing a policy online. If you plan to buy health insurance along with your spouse then you can negotiate a better deal. Online you not only get to compare quotes but also read the reviews and feedback from other clients. This will give you the opportunity to judge the credibility of the company. This will save you a significant amount of time and money, and of course, find the perfect health insurance policy.

Consider Health Insurance Premiums and Deductibles

When a person is buying health insurance, two of the most common terms that they will hear are the premium and the deductible of the health insurance policy. The premium refers to what the person will pay out of their own paycheck each pay period. This pay period could be every month, every six months or so forth. The premium must be paid on time in order to keep the health insurance active and to where you and your family can use it. Thus, when shopping around the lower the premium the lower the health insurance in total will be out of the person's pocket. However, that does not mean that the person should go with the policy that is cheapest. And in many cases, a lower premium is going to mean a higher deductible, while higher deductibles will mean a lower premium.

The deductible refers to the amount that the person pays up front to the doctor before the health insurance starts to kick in. When people are looking at deductibles they will find that some health insurance policies state that for every procedure, test or the like that the person has completed they have to pay a certain percentage of this before the insurance takes over. For example, the person may have to pay 20% of each procedure then the insurance pays the remaining 80%. Other times the deductible is set up for individual services. For example, a routine physical may cost the person $50 out of their own pocket, with the insurance picking up the rest. While a $6000 surgery could mean that the person pays $550 out of their own pocket. With this type, the person will have to know the procedure to know what they will pay and what the health insurance will pay.

So when considering the health insurance, the person has to consider just what it is that they want. Do they want to pay a higher premium each month to lower the deductibles that they pay when they do go to the doctor? Or would the person rather pay the lowest premium out there and pay the higher deductibles when they have procedures performed? It is up to the person and which option that they would feel is more beneficial to them.