Martine Ehrenclou, M.A., is a patient advocate and award-winning author of The Take-Charge Patient. Learn more about Martine and her work at thetakechargepatient.com.
I don’t know anyone who relishes the idea of going over his or her health insurance plan. Understanding health insurance is similar to grasping taxes, and we all know how we feel about wrapping our minds around those.
Still, with taxes many of us have accountants to help us. With health insurance, unless you have an insurance broker (someone who will help you price and compare plans), you have no one but yourself. It’s extremely important to understand the basics of your health insurance plan. If you don’t, you will end up with medical bills you didn’t count on and quite possibly an insurance plan you wish you didn’t have.
Many of us choose health insurance plans without really knowing how good they are, and we pick them based on basic coverage, the amount of the premiums and other out-of-pocket fees. Having a good health insurance plan will prevent you from facing medical bills that could put you in serious debt in the event you develop a medical condition, disease, or are injured. Imagine if you are in a car accident and don’t have health insurance. Medical bills capsize 60 percent of people who file for bankruptcy. We want to prevent that.
What a good health insurance plan looks like
A good health plan protects you from medical expenses you cannot afford. It has good coverage, meaning it covers doctor visits, hospitalizations, outpatient treatment, medications, labs, and imaging tests. You don't want a plan that excludes major benefit categories such as prescription drugs. If you choose the latter it may lower your premiums but will end up costing you more in the long run.
You’ll want to understand the basics of your health insurance plan whether you get it from your employer, privately, or receive Medicare, Medicaid, or another form of public insurance. You can find information in the packet you received that you most likely tucked away somewhere on the health insurance plan’s website, or you can call the customer service phone number and ask questions.
If you are not covered by a publicly funded program, or if your plan only covers a portion of medical services, you will need some form of private health insurance.
There are two types of health insurance:
Public health insurance
Includes Medicare, Medicaid, and CHIP, TRICARE, and Veterans Health Administration.
Medicare. Healthcare insurance provided by the federal government. It is open to people age 65 and older and to younger people with disabilities. Medicare does not cover all medical expenses and enrollees have out-of-pocket costs.
Medicaid. A state and federal partnership. Medicaid provides coverage for people under the age of 65 with lower incomes, older people, pregnant women, people with disabilities, and some families and children. Eligibility rules differ from state to state.
CHIP. Provides health coverage to children and their families with incomes too high to qualify for Medicaid, but who can’t afford private insurance.
TRICARE. Available to active duty service members and retirees of the uniformed services, their family members, survivors and others.
Veterans Administration. An integrated healthcare system that provides healthcare to veterans and some dependents.
Private health insurance
According to the CDC, 58 percent of people in the United States have some kind of private health insurance. This is insurance you purchase yourself.
Preferred Provider Organization (PPO). Contracts with healthcare providers and negotiates preferential prices. PPOs generally give you greater freedom to choose doctors, surgery centers, and hospitals. The down side is that fee-for-service plans usually involve more out of pocket expenses.
Health Maintenance Organization (HMO). You go directly to an HMO’s providers and you do not pay for each individual medical service. You pay a set premium to the HMO, which then offers a range of services, including preventive care. You can choose only among the doctors, hospitals, and other providers who have contracts with your HMO and you can receive only medical services authorized by your plan. If you use non-authorized providers or receive non-authorized care, your HMO will not pay any portion of your bills. HMOs are generally the least expensive of health insurance plans.
Point of Service Plans (POS). This is a hybrid of a PPO and an HMO. You can choose to have a primary care physician coordinate your care or opt to go directly with fee-for-service.