Adulting 101 Part 4: Health Insurance

 

The healthcare system in the U.S. is screwed. I once had to pay for an emergency room bill (not mine). Without health insurance, the bill would have been a few thousand dollars. With health insurance, it was $85. May fortune be with those who don’t have access to proper healthcare.

 

In the U.S., going without health insurance is akin to playing russian roulette. While it’s relatively rare for young people to get sick, bad luck happens, and having health insurance will financially protect you from a lot of events. Plus, since the Affordable Care Act has been passed, going without health insurance results in a fine, so you might as well be using that fine to pay towards something useful.

 

Health insurance isn’t the most intuitive thing to buy. Unlike a magazine subscription, where as long as you pay the monthly subscription fee, you get the magazine, the workings of health insurance kinda sucks to understand. But here goes.

 

Payment Structure

 

When you have a health insurance plan, you pay a monthly rate. This is similar to how you pay for certain amount of dollars every month for Netflix. This monthly subscription fee is called a premium, and keeps your health insurance plan running. 

 

When an accident happens, like if you broke your collarbone, you would go to the hospital to get that fixed. Most insurance plans have a system set up that requires you to pay a dollar amount out of your own pocket, before the insurance plan kicks in. This is called a deductible. Say I have a $1000 deductible. Before my health insurance helps me, I have to pay $1000 to the hospital before my insurance will chip in.

 

After the deductible is paid, there are different ways the health insurance company pays on your behalf. One of them is coinsurance. Coinsurance is the percentage of the hospital bill that is covered by your insurance company. If your hospital bill for your broken collarbone is $3000, and you’ve paid the $1000 deductible, the remaining bill is $2000. Of the remaining $2000, your insurance company will cover 80% of that ($1600). You will have to pay the remaining $400. So in total, you have to pay $1400. 

 

Coinsurances usually get capped by an out-of-pocket maximum. In other words, you won’t pay more for any hospital bills than the out-of-pocket maximum. If your out-of-pocket maximum was $1200, then instead of paying $1400, you would have paid $1200 instead. Out-of-pocket maximums do not include premiums.

 

Copays are also a thing. Copays cap a service by a specific dollar amount. For example, a copay of $15 can exist for doctor visits, which means I pay $15 for all doctor visits, and my insurance company pay the rest. I like copays because they tend to be pretty clean.

Another word that gets thrown around a lot in health insurance is “network”. Individual health insurance companies tend to have a network of healthcare providers that are willing to support their health insurance and provide services at a discount. Hospital A may support only BlueCross, Hospital B may support only Kaiser, and Hospital C may support both. BlueCross would have a network with Hospital A and C, and Kaiser would have a network with Hospital B and C. Health insurance companies typically want their customers to go to providers in their network, because these providers are offering services at a discount.

 

Most preventive care procedures, such as doctor check-ups and colonoscopy screenings, are completely covered by insurance companies. This is because it’s in their best interest to do so. A colonoscopy screening is a lot cheaper to cover than a surgery to remove a colon cancer tumor. If a colonoscopy decreases the chances of colon cancer, it improves their bottom line. It’s in your best interest to take advantage of preventive care procedures covered by your health insurance. Being sick isn’t fun.

 

Health Care plans

 

As a general rule of thumb, the higher your premiums, the lower your deductible, copays, and coinsurance. The lower your premiums, the higher your deductible, copays, and coinsurance. Here are a few plans (not all of them) with different structures.

 

For starters, the High Deductible Health Plan (HDHP) is a health insurance plan that’s characterized by, well, high deductibles. The advantage of this plan is that the premiums tend to be lower. These plans typically favor those who aren’t likely to get sick and have a solid amount of money saved up.

 

Health Maintenance Organization (HMO) plans are characterized by their network of providers. HMOs offer a broad amount of services because of this network. People on an HMO plan have to have a primary care physician within the insurance company’s network, who will refer them to specialists in the network should they need one. The important thing to note here is that a referral by your primary care physician is required, and in order to be covered, patients have to stay within the insurance company’s network.

 

PPO are typically more expensive than HMOs, but offer greater flexibility. You no longer have to have a primary care physician in the insurance company’s network, you don’t need their referral, and you can be covered by provider’s out of the health insurance company’s network. Because the insurance company no longer experiences a discount, patients have to pay more, but get greater flexibility.

 

Open Enrollment

 

Buying health insurance can also be a hassle too. New health insurance plans or plan renewals can only be bought during the open enrollment period. This period varies year-by-year, but  healthcare plans for 2020 enroll from November 1,2019 to December 15,2019. Missing this period is only a good idea if you there’s a special event in your life, like losing coverage or marriage.

 

Sponsored Health Insurance

 

There are forms of health insurance plans where the cost you pay is lessened. These sponsorships can vary from public to private, but their good to know.

 

If you have a private health insurance plan, it’s probably sponsored in part by your employer. The majority of private health insurance plans are sponsored by employers, which means that employers typically chip in on your premiums. If you ever leave an employer, whether through termination, lay-offs, or resignation, you can still keep the same health insurance plan, with the caveat that the employer no longer helps out with premiums. This is called COBRA insurance, and should be kept in mind in light of lay-offs.

 

Medicare and Medicaid are words that get thrown around a lot in the political landscape, sometimes interchangeably. They are not the same thing. On a general level, Medicare tends to be for older individuals (65+), and Medicaid tends to be for lower-income individuals. Medicare is funded on a federal level, and Medicaid is funded on the state level, with the federal government chipping in. Taxes pay for these programs, and they can be considered a form of public health insurance. 

 

Urgent Care Vs Emergency Care

 

I thought this internet meme was both funny, and informative. Check it out.

 

 

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