Having medical insurance can protect you from financial disaster if you or a family member become seriously ill or injured. It’s important to understand the basic features of your plan and how it works before making a decision about whether or not to purchase it.
Most people get health insurance through an employer or the government, but it’s also available for individuals and families who purchase it privately. Traditional plans typically cover a percentage of the cost for care received from providers, and they may require a premium (the fee paid to have coverage), a deductible and co-pays or coinsurance. These types of plans may be less expensive than a comprehensive or catastrophic plan, but they often don’t cover pre-existing conditions.
Managed care plans have a different structure than traditional plans, and they usually require that patients use doctors and hospitals in their network. Examples of these include HMOs, PPOs and EPOs. The insurance company negotiates a discount with network providers, and the patient pays a lower percentage of the total bill than they would if they went outside the network. Some managed care plans may have a deductible, while others do not.
In addition to managing costs, many insurers use their experience and research to determine the best way to offer health care to their members. This information helps them make decisions about which doctors and hospitals to contract with and which treatments and services to approve or deny. They may also establish guidelines for evaluating new treatments and technologies to help ensure that the benefits outweigh the risks.
The insurance industry has evolved over time to address the increasing costs of providing health care, and some plans are more sophisticated than others. For example, some health insurance companies use “utilization review” to decide if certain procedures are medically necessary. If they are not, the health plan may deny or reduce payment for those services. This process is sometimes done before the procedure, but it can also happen after the health provider sends a bill to the health plan.
Some experts believe that these practices can lead to unnecessarily high health care costs, and they may increase the number of people unable to afford their medical bills. For example, in the United States, 37% of adults with employer coverage and 33 percent of those with marketplace or individual-market plans have medical debt they are unable to afford to pay. This can lead to financial hardship and even bankruptcy. Medical debt is a growing problem, and it’s important to consider all of your options before choosing a health insurance plan. Then, you’ll be able to find the right one for you and your family.