Protect Your Savings with Health Insurance
There’s no telling when you might get sick. If that happens and you are not covered with any health insurance plan, it can turn out to be quite expensive, not to mention the fact that your employer won’t keep paying you past a certain amount of sick days. One of the best ways to save money in the long run is by getting an insurance package to protect yourself and your family at times of need.
Health insurance generally refers to a policy that covers your medical expenses in case of illness. The premise is that you will pay a periodic premium in advance of necessary medical care and the medical insurance will pay all or most of the unexpected, large medical bill at the time the care is needed. The main benefit of having a quality health insurance plan is that your finances are not put in jeopardy and your standard of living is not ruined because of a large, unexpected medical bill.
Unfortunately there isn’t a universal, one-size-fits-all health insurance plan in the United States. Instead, we have an industry littered with thousands of different health insurance plans, each with their own unique offerings. Some will cover pre-existing conditions and some not. Some will cover pregnancies, others not. Some are very specific (AAA Dental Insurance, for example). Some will cover prescriptions, some will not. Most offer varying premiums depending on how much of a deductible you are willing to pay. Some require copays. Some do not. Some vary the copays depending on how much of a premium you are willing to pay. Some offer full coverage for everything. And then there is coinsurance.
There are many options available to you if you are shopping for health insurance. Some will save you a lot of cash with a few compromises while others will cost you a lot with a lot of added value. Which you choose will depend on your health care needs and the size of your purse. Let’s take a look at your options, and what you need to know.
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Medical Insurance
Medical insurance pays for some, but not all, of your doctor, hospital and prescription drug costs. Many people have significant levels of debt because they didn’t have medical insurance or they didn’t have savings to pay the expenses that weren’t covered by their health plan. Late payments and defaults on medical debt may be reported on your credit reports and affect your credit score.
If you have access to an employer-provided plan, it can be a very good deal. Premiums are lower on employer-provided health insurance because risk is spread over a larger group of people. Take advantage of the lower costs that employer-sponsored health plans offer, but expect to pay part of the premium out of your paycheck. In addition to medical insurance, many employers offer dental and vision plans, often at low cost.
Flexible spending accounts
If you are insured through your employer, you should consider participating in a flexible spending account (FSA) if it is offered. An employer-sponsored FSA allows employees to save pretax dollars in an account to cover deductibles, co-pays, prescription and over-the-counter drugs, and other health expenses not covered by insurance. Employees need to plan their FSA spending so they have enough saved to cover their uninsured medical expenses but not more than they can use in one year plus two and a half months. On March 15 every year, money left in an FSA from the previous year is forfeited.
If you have health insurance and your employer doesn’t offer a flexible spending account, you should make sure your emergency savings account is adequate to provide a safety net against unexpected medical costs.
Health savings accounts
If you do not have health insurance or you need more affordable insurance, a high-deductible health plan (HDHP), coupled with a health savings account (HSA), provides medical insurance coverage and a tax-free opportunity to save for future medical needs. The premium for an HDHP is generally lower than for traditional health insurance because the deductible (the amount you pay before the insurance kicks in) is higher.
That’s where the health savings account comes in. HSAs are set up at banks or other financial institutions to pay for current and future health-related costs that occur before the deductible is met and insurance takes over. Contributions to an HSA are tax-deductible, up to certain limits, even if you do not itemize deductions on your income tax return. Interest earned on the HSA account is not taxable, and withdrawals are tax-free if used for qualified medical expenses. An HSA is portable, so it stays with you even if you change jobs or retire. Plus, unspent savings in an HSA can grow year-to-year.
Health insurance for children
You work hard to provide for your children and want to make sure they grow up strong, smart and healthy. It’s all fine and dandy if you can afford including them in your health insurance coverage (or provide them with coverage of their own). But if you can’t and are worrying about them not having health insurance, there may be an option available to you. Your state, and every state in the nation, has a health insurance program for infants, children and teens. The insurance is available to children in working families.
For little or no cost, this insurance pays for doctor visits, prescription medicines, hospitalizations, and emergency room visits. Kids that do not currently have health insurance are likely to be eligible, even if you are working. The states have different eligibility rules, but in most states, uninsured children 18 years old and younger, whose families earn up to $36,200 a year (for a family of four), are eligible.
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What are the costs associated with health insurance coverage?
Insurance Premium
The first cost associated with having health insurance is the premium. This is the amount that you pay on a regular basis to keep your coverage. It varies widely depending on what type of plan you purchase.
Copay
Another cost you need to know about is the copay. The copay is the amount that you’re expected to pay out-of-pocket for a medical expense at the time of the visit. This can range from $0 to $500 depending on the plan and the service you are receiving. A doctor visit, for example, may cost you a co-pay of $30, while a trip to the emergency room may be $50. Each plan and company has its own negotiated list of co-pays so be sure to read carefully when comparing plans.
Deductible
Another important cost is the deductible. Every year, this is the amount that you will need to pay out-of-pocket before your insurance plan kicks in. For example, if your deductible is $1,000, you will need to pay all medical costs such as doctor visits, blood work, and pharmaceutical purchases up to $1,000 before the insurance company pays one red cent. Your deductible “balance” is reset to zero every year and increases as you pay for certain medical expenses.
Co-Insurance
You could have a plan that does not have copays. You could instead have coinsurance where you and your insurance company share the medical bill according to a specific, agreed-upon formula. Your medical insurance could cover 80% and you would be responsible for 20% of the bill. These plans usually have an out-of-pocket maximum which would be the maximum amount you would have to pay before insurance kicks in to pay 100%. Just like the deductible, this limit is reset to zero every year.
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What are the limitations and/or exclusions?
Some medical insurance plans have coverage limitations. This may mean that the plan will only cover expenses up to a given dollar amount for a certain service. It could mean that the plan has an annual or lifetime limit for benefits for the insured. Once the limit has been reached, there are no more benefits paid by the insurance company and the policy holder will then be responsible. These limits are usually pretty high especially if the limit is a lifetime limit.
One last thing you should be aware of is that most plans have some exclusions. These are services or tests that will not be covered under your plan. An example may be that some plans do not cover maternity at all or during the first year of the policy. Another service that may be excluded could be services for mental health.
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A health insurance policy is very important to have. If something unfortunate were to happen to you, you could have peace of mind, knowing that your expenses can’t go past a certain limit. Contrary to what many people might think, health insurance is not a luxury meant for the rich. Affordable plans are available. It is very important to compare the costs and the benefits of the policies carefully when you are ready to choose your health insurance policy. You need to find the right insurance carrier for you by shopping their rates. Even if you are struggling financially, you can still buy a lower cost health insurance policy and get coverage.
SOME coverage is better than NO coverage.
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