Health Insurance

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ABOUT HEALTH INSURANCE

Health insurance is a contract that requires an insurance company to pay some or all of an individual’s health care costs for a premium. More specifically, health insurance typically pays for medical, surgical, prescription, and sometimes dental expenses incurred by the insured. Health insurance can reimburse the insured for expenses incurred from illness or injury, or pay the caregiver directly.

It is often included in employer benefits packages as a way to entice premium employees, with premiums partly covered by the employer but often also deducted from the employee’s pay. The cost of health insurance premiums is deductible from the payer, and benefits received are tax-deductible, with certain exceptions for S corporation employees.

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KEY IMPORTANT ISSUES TO NOTE ABOUT HEALTH INSURANCE

Health insurance is a type of insurance coverage that pays for medical and surgical expenses incurred by the insured.
Choosing a health insurance plan can be difficult due to plan rules regarding in-network and out-of-network services, deductibles, co-costs, and more.

Since 2010, the Affordable Care Act has prohibited insurance companies from denying coverage to patients with pre-existing conditions and allowed children to stay in their parent’s insurance plan until they turned 26.
Medicare and the Children’s Health Insurance Program (CHIP) are two public health insurance plans that target seniors and children, respectively. Medicare also serves people with certain disabilities.

How does health insurance work?

Health insurance can be tricky to navigate. Managed care insurance plans require that policyholders receive care from a network of designated health care providers to obtain the highest level of coverage. If patients request out-of-network care, they must pay a higher percentage of the cost. In some cases, the insurance company may refuse immediate payment for out-of-network services.

Many managed care plans—for example, health maintenance organizations (HMOs) and point of service plans (POS)—require patients to choose a primary care physician who oversees patient care, makes recommendations about treatment, and makes referrals to medical professionals. By contrast, Preferred Provider Organizations (PPOs) do not require referrals but have lower rates for using practitioners and services within the network.

Insurance companies may also refuse to cover certain services obtained without prior authorization. In addition, insurance companies may refuse to pay for brand-name drugs if a generic version or similar drug is available at a lower cost. All these rules should be mentioned in the materials provided by the insurance company and should be carefully reviewed. It is worth checking with your employer or company directly before incurring major expenses.

Increasingly, health insurance plans also have a co-fee, which is a set fee that plan subscribers must pay for services such as doctor visits and prescription medications; Deductibles that must be met before the health insurance covers or pays the claim; and coinsurance, a percentage of the health care costs the insurance company must pay even after they meet the deductible (and before they reach their spending limit for a certain period)

Insurance plans with higher personal costs generally have lower monthly premiums than plans with lower deductibles. When shopping for plans, individuals must weigh the benefits of lower monthly costs with the potential risks of out-of-pocket expenses in the event of a major illness or accident.

High Deductible Health Plans (HDHP)

One of the increasingly popular types of health insurance is the High Deductible Health Insurance Plan (HDHP). These insurance plans feature higher deductibles and lower premiums. For 2021, the IRS defines a High Deductible Health plan as a plan with a deduction of at least $1,400 for an individual or $2,800 for a family. The maximum sum they spread is $7,000 for an individual and $14,000 for a family.

For 2022, the discount limits will remain the same. But the maximum out-of-pocket expenses will rise to $7,050 and $14,100, respectively.  Maximum out-of-pocket does not apply to off-network services.

High-deductible health plans offer the unique advantage that if you have one, you are allowed to open a health savings account — and contribute to it with pre-tax income — which can be used to pay for eligible medical expenses. These plans offer a triple tax advantage:

• Contributions are tax deductible.
• Contributions grow on a tax-deferred basis.
• Eligible withdrawals for healthcare expenses are tax deductible

Special Considerations

In 2010, President Barack Obama signed the Affordable Care Act (ACA) into law. In participating states, the law expanded Medicaid, a government program that provides Medicare to very low-income individuals. In addition to these changes, the ACA created a federal marketplace for health insurance and also prohibited insurers from denying coverage to patients with pre-existing conditions and allowed children to remain in their parents’ insurance plan until they turned 26.

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Why do you need Health Insurance?

Health insurance is an agreement you make with an insurance company to have them pay for some or all of your medical expenses in exchange for a premium. Getting health insurance can prevent you from incurring medical bills that you cannot pay out of pocket.

Who needs health insurance?

The simple answer is everyone. Health insurance can help offset the costs of minor or major medical problems, including surgeries or treatment of life-threatening illnesses. But if you don’t have health insurance, you won’t be penalized for it under the terms of the Affordable Care Act.

How do you get health insurance?

If your employer offers health insurance as part of an employee benefits package, you may be covered by it. You can also purchase health insurance through the Health Insurance Marketplace. Some individuals may be eligible for health insurance coverage through Medicaid or Medicare.

How much does health insurance cost?

Your health insurance costs can vary based on the scope of coverage, the type of plan you have, and your deductibles. Subscriptions and coinsurance can also add to the cost, so it’s important to consider what you’ll pay before enrolling in a health plan.

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